II. 


III. 


IV. 


VI. 


VII. 


VIII. 


IX. 


X. 


XI. 


XII. 


QUESTIONS   OF  THE   DAY. 

THE  INDEPENDENT  MOVEMENT  IN  NEW  YORK,  as 

an  Element  in  the  next  Elections  and  a  Problem  in  Party  Govern- 
ment.    By  JUNIUS.     Octavo,  cloth,  $1.00 ;  paper       .         .         50 

FREE  LAND  AND  FREE  TRADE.  The  Lessons  of  the 
English  Corn-Laws  Applied  to  the  United  States.  By  SAMUEL  S. 
Cox.  Octavo,  cloth,  $1.25  ;  paper 50 

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PLIED  IN  THE  UNITED  STATES.  A  Study  in  Eco- 
nomic History.  By  F.  W.  TAUSSIG.  Octavo,  cloth  .  75 

FREE  TRADE.     BY  DAVID  A.  WELLS.     In  preparation. 

G.  P.  PUTNAM'S  SONS,  PUBLISHERS, 

27  and  29  West  Twenty-third  Street,  New  York, 


.' 


PROTECTION  TO  YOUNG  INDUSTRIES 


AS    APPLIED 


IN  THE  UNITED  STATES. 


A  STUDY  IN  ECONOMIC  HISTORY. 


By  F.   W.  TAUSSIG,  Ph.D. 

Instructor  in  Political  Economy  in  Harvard  Collegt 


G.  P.  PUTNAM'S   SONS 

NEW  YORK:  27  &  29  WEST  230  STREET 

LONDON  :  25  HENRIETTA  STREET,  CO  VENT  GARDEN 

1884 


Copyright,  1883, 

BY  FRANK  W.  TAUSSIG. 


Press  of 

G.  P.  Putnam's  Sons 
New  York 


... 


NOTE. 

This  essay  was  originally  written  in  competition  for  the  Toppan 
Prize  in  Political  Science  in  Harvard  University,  and  received 
that  prize  in  October,  1882.  In  this,  the  second  edition,  some 
slight  corrections  have  been  made,  and  a  few  pages  added  to  the 
concluding  remarks. 


M  9518 


CONTENTS. 

Page. 

I.    THE  ARGUMENT  FOR  PROTECTION  TO  YOUNG 

INDUSTRIES  .  '  .        ......          7 

II.  THE  INDUSTRIAL  HISTORY  OF  THE  UNITED 
STATES,  AND  THE  COURSE  OF  PROTECTIVE 
LEGISLATION,  FROM  1789  to  1838  .  .  14 

III.  HISTORY  OF  THE  COTTON  MANUFACTURE        .      28 

IV.  HISTORY  OF  THE  WOOLLEN  MANUFACTURE     .      40 
V.     HISTORY  OF  THE  IRON  MANUFACTURE      .        .      49 

VI.     CONCLUDING  REMARKS       .        .        .        .        .      65 


PROTECTION  TO  YOUNG  INDUSTRIES  AS 
.  APPLIED  IN  THE  UNITED  STATES. 


i. 

THE  ARGUMENT  FOR  PROTECTION  TO  YOUNG 
INDUSTRIES. 

OF  the  arguments  in  favor  of  protection,  none 
has  been  more  frequently  or  more  sincerely 
urged  than  that  which  is  formulated  in  the 
phrase  "  Protection  to  young  industries."  None 
has  received  so  generally  the  approval  of  econ- 
omists, even  of  those  little  disposed  to  acknowl- 
edge the  validity  of  any  reasoning  not  in 
accordance  with  the  theory  of  free  exchange. 
Mr.  Mill  gave  it  the  weight  of  his  approval  in 
a  passage  which  has  been  frequently  cited. 
Later  English  writers  have  followed  him  in 
granting  its  intrinsic  soundness.  The  reasoning 
of  the  greatest  German  protectionist  writer,  List, 
is  based,  so  far  as  it  is  purely  economic,  on  this 
argument ;  and  since  List's  time  the  argument 
has  taken  an  established  place  in  German  trea- 
tises on  political  economy. 

The  argument  is,  in  brief,  that  it  may  be 
advantageous  to  encourage  by  legislation  a 
branch  of  industry  which  might  be  profitably 
carried  on,  which  is  therefore  sure  to  be  carried 


8  PROTECTION    TO   YOUNG   INDUSTRIES. 

on  eventually,  but  whose  rise  is  prevented  for 
the  time  being  by  artificial  or  accidental  causes. 
The  essential  point  of  the  argument  lies  in  the 
assumption  that  the  causes  which  prevent  the 
rise  of  the  industry,  and  render  protection  neces- 
sary, are  not  natural  and  permanent  causes,  — 
not  such  as  would  permanently  prevent,  under  a 
state  of  freedom,  the  growth  of  the  industry 
in  question.  Let  it  be  supposed,  for  instance, 
that  the  industry  to  be  encouraged  is  the  cotton 
manufacture.  The  natural  advantages  of  a 
given  country  for  making  cotton  cloths  are  good, 
we  may  suppose,  in  comparison  with  the  advan- 
tages for  producing  other  things.  The  raw 
material  is  cheap,  power  for  machinery  is  abun- 
dant, the  general  intelligence  and  industry  of 
the  people  —  which,  since  they  admit  of  but 
very  slow  change,  must  be  considered  natural 
advantages  —  are  such  as  to  fit  them  for  com- 
plex industrial  operations.  There  is  no  perma- 
nent cause  why  cotton  goods  should  not  be 
obtained  at  as  low  cost  by  making  them  at  home 
as  by  importing  them ;  perhaps  they  can  even 
be  produced  at  lower  cost  at  home.  But  the 
cotton  manufacture,  let  it  be  further  supposed, 
is  new;  the  machinery  used  is  unknown  and 
complicated,  and  requires  skill  and  experience 
of  a  kind  not  attainable  in  other  branches  of 
production.  The  industry  of  the  country  runs 
by  custom  in  other  grooves,  from  which  it  is  not 


THE  ARGUMENT  IN  GENERAL. 


9 


easily  diverted.  If,  at  the  same  time,  the  com- 
munication of  knowledge  be  slow,  and  enterprise 
be  hesitating,  we  have  a  set  of  conditions  under 
which  the  establishment  of  the  cotton  manufac- 
ture may  be  prevented,  long  after  it  might  have 
been  carried  on  with  advantage.  Under  such 
circumstances  it  may  be  wise  to  encourage  the 
manufacture  by  duties  on  imported  goods,  or  by 
other  analogous  measures.  Sooner  or  later  the 
cotton  manufacture  will  be  introduced  and 
carried  on,  even  without  assistance  ;  and  gov- 
ernment assistance  will  only  cause  it  to  be  estab- 
lished with  less  friction,  and  at  an  earlier  date, 
than  would  otherwise  have  been  the  case. 

It  may  illustrate  more  clearly  the  conditions 
under  which  such  assistance  may  be  useful,  to 
point  out  those  under  which  it  is  superfluous. 
The  mere  fact  that  an  industry  is  young  in 
years  —  has  been  undertaken  only  within  a  short 
period  of  time  —  does  not  supply  the  conditions 
under  which  protection  is  justified  by  this  argu- 
ment. An  industry  recently  established,  but 
similar  in  kind  to  other  branches  of  production 
already  carried  on  in  the  country,  would  hardly 
come  within  its  scope.  But  where  the  industry 
is  not  only  new,  but  forms  a  departure  from  the 
usual  track  of  production ;  where,  perhaps,  ma- 
chinery of  an  entirely  strange  character,  or 
processes  hitherto  unknown,  are  necessary ; 
where  the  skill  and  experience  required  are  such 


IO  PROTECTION    TO    YOUNG    INDUSTRIES. 

as  could  not  be  attained  in  the  occupations 
already  in  vogue ;  under  these  circumstances 
protection  may  be  applied  with  good  results  if  no 
natural  disadvantages,  in  addition  to  the  artificial 
obstacles,  stand  in  the  way.  The  manufacture 
of  silk  goods  in  the  United  States  at  the  present 
time,  probably  supplies  an  example  of  an  in- 
dustry which,  though  comparatively  new,  can 
hardly  be  said  to  deserve  protection  as  a  young 
industry.  The  methods  and  machinery  in  use 
are  not  essentially  different  from  those  of  other 
branches  of  textile  manufactures.  No  great 
departure  from  the  usual  track  of  production  is 
necessary  in  order  to  make  silks.  Manufac- 
turers of  the  same  general  character  are  estab- 
lished on  all  sides.  Work-people  and  man- 
agers with  experience  in  similar  work  can  be 
easily  found.  Moreover,  the  ease  of  obtaining 
and  communicating  knowledge  at  the  present 
time  is  such,  that  information  in  regard  to  the 
methods  and  machinery  of  other  countries  can 
be  easily  obtained,  while  workmen  can  be 
brought  from  abroad  with  comparative  ease. 
Those  artificial  obstacles  which  might  tempora- 
rily prevent  the  rise  of  the  industry  do  not  exist ; 
and  it  may  be  inferred  that,  if  there  are  no 
permanent  causes  which  prevent  silks  from  being 
made  as  cheaply  in  the  United  States  as  in  other 
countries,  the  manufacture  will  be  undertaken 
and  carried  on  without  needing  any  stimulus 
from  protecting  duties. 


THE  ARGUMENT  IN   GENERAL.  II 

There  are  two  sets  of  conditions  under  which 
it  is  supposable  that  advantages  not  natural  or 
inherent  may  be  found  in  one  country  as  com- 
pared with  another,  under  which  merely  tempo- 
rary and  accidental  causes  may  prevent  the  rise 
of  certain  branches  of  industry  in  the  second 
country,  and  under  which,  therefore,  there 
may  be  room  for  the  application  of  protection. 
These  are,  first,  the  state  of  things  in  a  new 
country  which  is  rapidly  growing  in  population, 
and  in  which,  as  population  becomes  more 
dense,  there  is  a  natural  change  from  exclusive 
devotion  to  the  extractive  industries  toward 
greater  attention  to  those  branches  of  production 
classed  as  manufactures.  The  transition  from 
a  purely  agricultural  state  to  a  more  diversified 
system  of  industry  may,  in  the  complete  absence 
of  other  occupations  than  agriculture,  be  re- 
tarded beyond  the  time  when  it  might  advan- 
tageously take  place.  Secondly,  when  great 
improvements  take  place  in  some  of  the  arts  of 
production,  it  is  possible  that  the  new  processes 
may  be  retained  in  the  country  in  which  they 
originate,  and  may  fail  to  be  applied  in  another 
country,  through  ignorance,  the  inertia  of  habit, 
and  perhaps  in  consequence  of  restrictive  legis- 
lation at  the  seat  of  the  new  methods.  Here, 
again,  the  obstacles  to  the  introduction  of  the  new 
industry  may  be  of  that  artificial  kind  which 
can  be  overcome  most  easily  by  artificial  means. 


IX  PROTECTION    TO   YOUNG    INDUSTRIES. 

Now,  both  these  sets  of  conditions  seem  to  have 
been  fulfilled  in  the  United  States  in  the  begin- 
ning of  the  present  century.  The  country  was 
normally  emerging,  to  a  considerable  extent, 
from  that  state  of  almost  exclusive  devotion  to 
agriculture  which  had  characterized  the  colonies. 
At  the  same  time  enormous  changes  were  taking 
place  in  the  mechanical  arts,  and  new  processes, 
hardly  known  outside  of  England,  and  held 
under  a  practical  monopoly  there,  were  revolu- 
tionizing the  methods  of  manufacturing  produc- 
tion. Under  these  circumstances  there  would 
seem  to  have  existed  room  for  the  legitimate 
application  of  protection  for  young  industries. 

The  more  detailed  examination  in  the  follow- 
ing pages  of  the  industrial  condition  of  the 
country  during  the  earlier  part  of  this  century 
will  bring  out  more  clearly  the  reasons  why  pro- 
tection may  then  have  been  useful.  It  may  be 
well,  however,  to  notice  at  this  point  one  differ- 
ence between  those  days  and  the  present,  which 
must  seriously  affect  the  application  of  the  argu- 
ment we  are  considering.  Even  if  we  were  to 
suppose  the  conditions  of  1810  to  exist  now ;  if 
the  country  were  now  first  beginning  to  attempt 
manufactures,  and  if  a  great  revolution  in  manu- 
facturing industry  happened  to  make  the  attempt 
peculiarly  difficult ;  even  then  the  obstacles  aris- 
ing from  the  force  of  custom,  and  from  the  want 
of  familiarity  with  new  processes,  would  be 


THE   ARGUMENT    FOR   PROTECTION.  13 

much  more  easy  to  overcome  now  than  sixty 
years  ago.  The  ties  of  custom  in  industry  have 
become  much  loosened  in  the  last  half  century ; 
capital  and  labor  turn  more  easily  to  new  em- 
ployments. The  railroad,  the  telegraph,  the 
printing-press,  the  immense  increase  in  the  facil- 
ity of  communication,  the  constant  change  in 
methods  of  production  in  all  industries,  have 
tended  to  make  new  discoveries  and  inventions 
common  property,  and  to  do  away  with  advan- 
tages in  production  based  on  other  than  perma- 
nent causes.  It  is  true  that  there  are  still 
appreciable  differences  in  the  arts  of  production 
in  different  countries,  and  that  some  may  have 
a  superiority  over  others  based  on  the  merely 
accidental  or  temporary  possession  of  better 
processes  or  more  effective  machinery.  But  the 
United  States  hardly  lag  behind  in  the  industrial 
advance  of  the  present  day ;  and  where  they  do 
labor  under  artificial  or  factitious  advantages, 
these  cannot  endure  long  or  be  of  great  conse- 
quence under  a  system  of  freedom. 

Sixty  years  ago,  however,  the  state  of  things 
was  very  different.  The  conditions  were  then 
in  force  under  which  protection  might  be  needed 
to  enable  useful  industries  to  be  carried  on.  The 
argument  for  protection  to  young  industries  was 
accordingly  the  most  effective  of  those  urged  in 
favor  of  the  protective  policy.  During  the 
twenty  years  which  followed  the  war  of  1812 


14  PROTECTION  TO  YOUNG  INDUSTRIES. 

the  protective  controversy  was  one  of  the  most 
important  features  in  the  political  life  of  the  na- 
tion ;  and  the  young  industries'  argument  was 
the  great  rallying-cry  of  the  protectionists.  It 
is  of  interest  to  examine  how  far  protection  of 
the  kind  advocated  was  actually  applied,  and 
how  far  it  was  the  cause,  or  an  essential  con- 
dition, of  that  rise  of  manufactures  which  took 
place.  The  object  of  this  paper  is  to  make 
such  an  investigation. 


IT. 

THE  INDUSTRIAL   HISTORY    OF  THE    UNITED    STATES, 
AND  THE  COURSE  OF  PROTECTIVE  LEGIS- 
LATION, FROM   1789   TO   1838. 

The  early  economic  history  of  the  United 
States  may  be  divided  into  two  periods.  The 
first,  which  is  in  the  main  a  continuation  of  the 
colonial  period,  lasted  till  about  the  year  1808  ; 
the  embargo  marks  the  beginning  of  the  series 
of  events  which  closed  it.  The  second  began 
in  1808,  and  lasted  through  the  generation  fol- 
lowing. It  was  during  the  second  period  that 
the  most  decided  attempt  was  made  to  apply 
protection  to  young  industries  in  the  United 
States  ;  and  with  this  period  we  are  chiefly  con- 
cerned. 


INDUSTRIAL  HISTORY,   1789—  i8s&.  15 

During  the  first  period  the  country  was,  on  the 
whole,  in  the  same  industrial  condition  in  which 
the  colonies  had  been.  The  colonies  had  been 
necessarily  engaged  almost  exclusively  in  agri- 
culture, and  in  the  occupations  closely  connected 
with  it.  The  agricultural  community  could  not 
get  on  without  blacksmiths,  carpenters,  masons, 
shoemakers,  and  other  artisans ;  and  these  ex- 
isted side  by  side  with  the  farmers.  In  those 
days,  it  must  be  remembered,  handicraft  work- 
men of  this  kind  occupied  a  more  important 
place  in  industrial  organizations  than  they  do  at 
the  present  time.  They  made  many  articles 
and  performed  many  services  which  are  now 
the  objects  of  manufacturing  production  and 
of  extensive  trade,  and  come  within  the  range  of 
international  dealings.  Many  tools  were  then 
made  by  individual  blacksmiths,  many  wares 
by  the  carpenter,  many  homespun  cloths  fulled 
and  finished  at  the  small  fulling-mill.  Production 
of  this  kind  necessarily  takes  place  at  the  locality 
where  consumption  goes  on.  In  those  days  the 
division  of  labor  between  distant  bodies  of  men 
had  been  carried  out  to  a  comparatively  slight 
extent ;  the  range  of  international  trade  was 
therefore  much  more  limited.  The  existence  of 
these  handicraft  workmen  accounts  for  the  nu- 
merous notices  of  "  manufacturers  "  which  Mr. 
Bishop  industriously  collected  in  his  History  of 
Manufactures,  and  is  not  inconsistent  with  the 


1 6         PROTEC  noN  ro  YOUNG  INDUSTRIES. 

mainly  extractive  character  of  the  industry  of 
the  colonies.     What  could  be  imported  at  that 
time  was  imported,  and  was  paid  for  by  the  ex- 
portation of  agricultural  produce.     The  exporta- 
tion took  place  largely  to  the  West  Indies,  so  far 
as  the  northern  colonies  were  concerned.     From 
the  West  India  trade  the  means  for  paying  indi- 
rectly for  the  imported  goods  were  mainly  ob- 
tained.    There  were  some  important  exceptions 
to  this    general  state  of  things.      Shipbuilding 
was  carried  on  to  a  considerable  extent  in  New 
England,  where  abundance  of  material  and  the 
necessity  of  transportation  by  water  made  such 
an  industry  natural.    The  production  of  unmanu- 
factured iron  was  carried  on  to  a  considerable 
extent ;  for  at  that  time  the  production  of  pig 
and  bar  iron  tended  to  fix  itself  in  those  coun- 
tries where  wood,  the  fuel  then  used,  was  abun- 
dant, and  was  therefore  an  industry  much  more 
analogous  to  agriculture  than  it  has  been  since  the 
employment  of  coal  as  fuel.    In  the  main,  how- 
ever, the  colonies  made  only  such  manufactures 
as  could  not  be  imported  ;  all  manufactured  goods 
that  could  be  imported  were  not  made  at  home, 
but  obtained  in  exchange  for  agricultural  exports. 
This  state  of  things  was  little  changed  after 
the  end  of  the  Revolutionary  war  and  the  adop- 
tion of  the  Constitution.     The  year  1789  marks 
no  such  epoch  in  economic  as  it  does  in  political 
history.      Agriculture,  commerce,   and  the  ne- 


INDUSTRIAL  HISTORY,  2789  —  1838.  17 

cessary  mechanic  arts,  continued  to  form  the 
main  occupations  of  the  people.  Such  goods  as 
could  be  imported  continued  to  be  obtained  from 
abroad  in  exchange  for  exports,  mainly  of  agri- 
cultural produce.  The  range  of  importable 
articles  was,  it  is  true,  gradually  extending. 
Cloths,  linens,  and  textile  fabrics  were  still 
chiefly  homespun,  and  fine  goods  of  this  kind 
were  still  in  the  main  the  only  textile  fabrics  im- 
ported. But  with  the  great  growth  of  manufac- 
turing industry  in  England  during  this  time,  the 
range  of  articles  that  could  be  imported  was 
growing  wider  and  wider.  During  the  Napole- 
onic wars  the  American  market  was  much  the 
most  important  for  the  newly  established  Eng- 
lish manufactures.  Large  quantities  of  cotton 
goods  were  imported,  and  the  importations  of 
manufactures  of  iron,  in  regard  to  which  a  sim- 
ilar change  in  production  was  then  taking  place, 
also  increased  steadily.  Sooner  or  later  the 
change  in  the  course  of  production  which  was 
going  on  in  England  must  have  had,  and  did 
have,  a  strong  influence  on  the  economic  condi- 
tion of  the  United  States  ;  but  for  the  time  being 
this  influence  was  little  felt,  and  the  country 
continued  in  the  main  to  run  in  the  grooves  of 
the  colonial  period. 

This  absence  of  development  was  strongly 
promoted  by  the  peculiar  condition  of  the  foreign 
trade  of  the  country  up  to  1808.  The  wars  of 


l8  PROTECTION  TO  YOUNG  INDUSTRIES. 

the  French  Revolution  opened  to  this  country 
profitable  markets  for  its  agricultural  products 
in  the  West  Indies  and  in  Europe,  and  profitable 
employment  for  its  shipping,  both  in  carrying 
the  increased  exports  and  in  a  more  or  less  au- 
thorized trade  between  the  belligerent  countries 
and  their  colonies.  For  many  years  the  gains 
arising  from  these  sources,  though  not  regular 
or  undisturbed,  were  large,  and  afforded  every 
inducement  to  remain  in  the  occupations  that 
yielded  them.  The  demand  for  agricultural 
products  for  exportation  to  the  belligerent  coun- 
tries and  their  colonies  was  large,  and  the  prices 
of  wheat,  corn,  meat,  were  correspondingly 
high.  The  heavy  exports  and  the  profits  on 
freights  furnished  abundant  means  for  paying 
for  imported  goods.  Importations  were  there- 
fore large ;  and  imported  goods  were  so  cheap 
as  to  afford  little  inducement  for  engaging  in  the 
production  of  similar  goods  at  home.1 

The  tariff  legislation  of  this  period  was  nat- 
urally much  influenced  by  the  direction  taken 
by  the  industries  of  the  country.  The  pecu- 
liarly favorable  conditions  under  which  agricul- 
ture and  commerce  were  carried  on  prevented 
the  growth  of  any  strong  feeling  in  favor  of 
assisting  manufactures.  During  the  years  im- 

i  The  following  tables  of  imports  and  exports  show  the  influence  of 
these  circumstances  on  the  foreign  trade  of  the  country.  The  exports 
of  foreign,  produce,  show  the.  swelling  of  the  carrying-trade.  The  price 
of  flour  is  addedv  and  shows;  the  effect  on  the  prices  of  agricultural 


INDUSTRIAL  HISTORY,  1789  —  1838.  1C) 

mediately  following  the  formation  of  the  Consti- 
tution, the  protective  feeling  had  some  strength ; 
but  the  European  wars,  by  their  political  as  well 
as  by  their  economic  effects  on  the  United  States, 
tended  to  put  the  question  of  protection  in  the 
background.  The  expediency  of  protective 
legislation  wras  indeed  little  questioned.  Ham- 
ilton, Jefferson,  Madison,  and  their  contempo- 
raries, all  declared  themselves,  at  one  time  or 
another,  in  favor  of  protective  measures.  But 
no  effective  action  was  taken.  There  are  some 


produce.      The  influence  of  the  temporary  stoppage  of  the  war  in 
Europe  during  the  time  of  the  Peace  of  Amiens  is  clearly  seen. 


Tear. 

Gross  Imports, 

Gross  Exports. 

Exports  of  For- 
eign Produce. 

Price  of 
Flour 
per  Bbl. 

ooo  Omitted. 

ooo  Omitted. 

ooo  Omitted. 

1791 

29,200 

19,000 

500 

92 

3i,Soo 

20,700 

1,750 

$  5-07 

93 

31,100 

26,100 

2,100 

6.21 

94 

34,600 
69,750 

33,000 
48,000 

6,500 
8,500 

7.23 
12.05 

96 

81,400 

67,000 

26,300 

12.43 

97 

75,400 

56,800 

27,000 

9.00 

98 

68,500 

61,500 

33,ooo 

8.78 

o" 

79,000 

78,600 

45,5oo 

9.63 

1800 

91,200 

71,000 

39,100 

9-85 

01 

Peace  of   J  02 
Amiens.    {  03 

111,300 
76,300 
64,700 

94,000 
72,000 
55>8oo 

46,600 
35,7oo 
13,600 

10.45 

£-75! 
6.73 

04 

85,000 

77,700 

36,200 

8.22 

°I 

1  20,600 

95,500 

53,2oo 

10.28 

06 

129,400 

101,500 

60,300 

7-30 

07 

138,500 

108,300 

59,600 

7.00 

08 

57,000 

22,400 

13,000 

5.60 

09 

10 

59,400 
85,400 

52,200 
66,700 

20,800 
24,400 

6.90 
9.66 

ii 

53,4oo 

61,300 

16,000 

IO.OO 

12 

77,000 

33,5oo 

8,500 

8-75 

13 

22,000 

27,900 

2,800 

8.50 

H 

13,000 

6,900 

ISO 

7.70 

The  tables  of  imports  and  exports  are  from  the  Treasury  Reports. 
The  last  table,  giving  the  price  of  flour,  is  in  American  State  Papers, 
Finance,  III.,  536. 


2O  PROTECTION  TO  YOUNG  INDUSTRIES. 

provisions  in  the  early  tariff-acts  which  were 
undoubtedly  passed  with  distinct  protective  in- 
tentions, such  as  some  of  the  duties  on  hemp, 
cordage,  glass,  nails,  and  various  kinds  of  iron 
manufactures.  The  duties,  however,  were  in  all 
cases  moderate.  Those  which  were  most  dis- 
tinctly protective  were  directed  to  the  assistance 
of  industries  already  well  established,  and  had 
no  appreciable  influence  in  diverting  the  activity 
of  the  country  from  other  channels.  No  decided 
action  was  taken  for  the  encouragement  of  the 
production  of  textiles  and  of  unmanufactured 
iron,  which  later  became  the  great  subjects  of 
contention  in  the  protective  controversy. 

This  state  of  things  came  to  an  end  in  1808. 
The  complications  with  England  and  France 
led  to  a  series  of  measures  which  mark  a  turning- 
point  in  the  industrial  history  of  the  country. 
The  Berlin  and  Milan  decrees  of  Napoleon,  and 
the  English  orders  in  Council,  led  in  December, 
1807,  to  the  Embargo.  The  Non-Intercourse 
act  followed  in  1809.  War  with  England  was 
declared  in  1812.  During  the  war,  intercourse 
with  England  was  prohibited,  and  all  import 
duties  were  doubled.  The  last-mentioned  meas- 
ure was  adopted  in  the  hope  of  increasing  the 
revenue,  but  had  little  effect;  for  foreign  trade 
practically  ceased  to  exist.  This  series  of  re- 
strictive measures  blocked  the  accustomed  chan- 
nels of  exchange  and  production,  and  gave  an 


INDUSTRIAL  HISTORY,  1789  —  1838.  21 

enormous  stimulus  to  those  branches  of  industry 
whose  products  had  before  been  imported.  Es- 
tablishments for  the  manufacture  of  cotton  goods, 
woollen  cloths,  iron,  glass,  pottery,  and  other 
articles,  sprang  up  with  a  mushroom  growth. 
We  shall  have  occasion  to  refer  more  in  detail 
to  this  growth  when  the  history  of  some  of  these 
manufactures  comes  to  be  considered  separately. 
It  is  sufficient  here  to  note  that  the  restrictive 
legislation  of  1808-15  was,  for  the  time  being, 
equivalent  to  extreme  protection.  The  conse- 
quent rise  of  a  considerable  class  of  manufac- 
turers, whose  success  depended  largely  on  the 
continuance  of  protection,  formed  the  basis  of 
a  strong  movement  for  more  decided  limitation 
of  foreign  competition. 

The  feeling  in  favor  of  these  manufacturers 
obtained  some  clear  concessions  in  the  tariff-act 
of  1816.  The  controlling  element  in  Congress 
at  that  time  consisted  of  the  young  men  of  the 
rising  generation,  who  had  brought  about  the 
war,  and  felt  in  a  measure  responsible  for  its  re- 
sults. There  was  a  strong  feeling  among  these, 
that  the  manufacturing  establishments  which  had 
grown  up  during  the  war  should  be  assisted. 
There  was  no  feeling,  however,  either  in  Con- 
gress or  among  the  people,  such  as  appeared  in 
later  years,  in  favor  of  a  permanent  strong  pro- 
tective policy.  Higher  duties  were  therefore 
granted  on  those  goods  in  whose  production  most 


22  PROTECTION  TO  YOUNG  INDUSTRIES. 

interest  was  felt,  textile  fabrics ;  but  only  for  a 
limited  period.  Cotton  and  woollen  goods  were 
to  pay  25  per  cent  till  1819  ;  after  that  date  they 
were  to  pay  20  per  cent.  A  proviso,  intended  to 
make  more  secure  this  measure  of  protection, 
was  adopted  in  regard  to  a  minimum  duty  on 
cotton  goods,  to  which  reference  will  be  made  in 
another  connection.  These  and  some  other  dis- 
tinctly protective  provisions  were  defended  by 
Calhoun,  on  the  ground  of  the  argument  for  pro- 
tection to  young  industries ;  and  on  that  ground 
they  were  adopted,  and  at  the  same  time  limited. 
The  general  increase  of  duties  under  the  Act  of 
1 8 1 6,  to  an  average  of  about  twenty  per  cent,  was 
due  to  the  necessity  of  providing  for  the  payment 
of  the  interest  on  the  heavy  debt  contracted  dur- 
ing the  war. 

For  some  time  after  the  close  of  the  war  and 
the  enactment  of  the  tariff  of  1816,  there  was  no 
pressure  for  a  more  vigorous  application  of  pro- 
tective principles.  The  general  expectation  was, 
that  the  country  would  fall  back  into  much  the 
same  state  of  things  as  that  which  had  existed 
before  1808 ;  that  agriculture  and  commerce 
would  again  be  as  profitable,  and  would  be  as 
exclusively  the  occupations  of  the  people,  as  dur- 
ing the  previous  period.  Such  an  expectation 
could  not  in  the  nature  of  things  be  entirely  ful- 
filled ;  but  for  a  time  it  was  encouraged  by  sev- 
eral accidental  circumstances.  The  harvests  in 


INDUSTRIAL  HISTORY,  1789  —  1838.  23 

Europe  for  several  seasons  were  bad,  and  caused 
a  stronger  demand  and  higher  price  for  the  staple 
food  products.  The  demand  for  cotton  was 
large,  and  the  price  high.  Most  important  of 
all,  the  currency  was  in  a  state  of  complete  dis- 
arrangement, and  concealed  and  supported  an 
unsound  economic  condition.  Under  cover  of 
the  excessive  issues  of  practically  irredeemable 
bank-notes,  the  prices  of  all  commodities  were 
high,  as  were  the  general  rates  of  wages  and 
rents.  The  prices  of  bread-stuffs  and  provisions, 
the  staples  of  the  North,  and  of  cotton  and  to- 
bacco, the  staples  of  the  South,  were  not  only 
absolutely,  but  relatively  high,  and  encouraged 
continued  large  production  of  these  articles. 
The  prices  of  most  manufactured  goods  were 
comparatively  low.  After  the  war  the  imports 
of  these  from  England  were  very  heavy.  The 
long  pent-up  stream  of  English  merchandise  may 
be  said  to  have  flooded  the  world  at  the  close  of 
the  Napoleonic  wars.  In  this  as  in  other  coun- 
tries, imports  were  carried  beyond  the  capacity 
for  consumption,  and  prices  fell  much  below  the 
normal  rates.  The  strain  of  this  over-supply  and 
fall  of  prices  bore  hard  on  the  domestic  manu- 
facturers, especially  on  those  who  had  begun 
and  carried  on  operations  during  the  restrictive 
period ;  and  many  of  them  were  compelled  to 
cease  production  and  to  abandon  their  works. 
This  abnormal  period,  which  had  its  counter- 


24  PROTECTION  TO  YOUNG  INDUSTRIES. 

part  of  feverish  excitement  and  speculation  in 
Europe,  came  to  an  end  in  1818-19.  The  civil- 
ized world  then  settled  down  to  recover  slowly 
from  the  effects  of  a  generation' of  war  and  de- 
struction. In  the  United  States  the  currency 
bubble  was  pricked  in  the  latter  part  of  1818^ 
Prices  began  to  fall  rapidly  and  heavily,  and 
continued  to  fall  through  1819.  The  prices  of 
the  agricultural  staples  of  the  North  and  South 
underwent  the  greatest  change  ;  for  the  harvests 
in  Europe  were  again  good  in  1818,  the  English 
corn-laws  of  1816  went  into  operation,  and  the 
demand  for  cotton  fell  off.  A  new  scale  of  mone- 
tary exchange  gradually  went  into  operation. 
During  the  period  of  transition  there  was,  as 
there  always  is  in  such  periods,  much  suffering 
and  uneasiness  ;  but  gradually  the  difficulties  of 
adjusting  old  contracts  and  engagements  were 
overcome,  and  the  habits  of  the  people  accom- 
modated themselves  to  the  new  regime.  Within 
three  or  four  years  after  1819  the  effects  of  the 
crash  were  no  longer  felt  in  most  parts  of  the 
country. 

Two  results  which  it  is  important  to  note  in 
this  connection  followed  from  the  crisis  of  1819  : 
first,  a  great  alteration  in  the  position  and  pros- 
pects of  manufacturing  industries ;  and  second, 
the  rise  of  a  strong  public  feeling  in  favor  of  pro- 
tecting these  industries,  and  the  final  enactment 
of  legislation  for  that  purpose.  The  first  of  these 


INDUSTRIAL  HISTORY,  1789—1838.  25 

results  was  due  immediately  to  the  fact  that  the 
fall  in  prices  after  1819  did  not  so  greatly  affect 
most  manufactured  goods  as  it  did  other  articles. 
The  prices  of  manufactured  goods  had  already 
declined,  in  consequence  of  the  heavy  importa- 
tions in  the  years  immediately  following  the  war. 
When,  therefore,  the  heavy  fall  took  place  in  1819 
in  the  prices  of  food  and  of  raw  materials,  in  the 
profits  of  agriculture,  in  wages,  and  in  rents,  the 
general  result  was  advantageous  for  the  manu- 
facturers. They  were  put  into  a  position  to  pro- 
duce with  profit  at  the  lower  prices  which  had 
before  been  unprofitable,  and  to  meet  more  easily 
foreign  competition.  After  the  first  shock  was 
over,  and  the  system  of  exchange  became  cleared 
of  the  confusion  and  temporary  stoppage  which 
must  attend  all  great  fluctuations  in  prices,  this 
result  was  plainly  felt.1  It  is  easy  to  see  that  the 
whole  process  was  nothing  more  than  the  evolu- 
tion of  the  new  state  of  things  which  was  to  take 
the  place  of  that  of  the  period  before  1808. 
Before  that  year  manufactured  goods,  so  far  as 
they  could  be  obtained  by  importation,  were  im- 
ported cheaply  and  easily  by  means  of  large  ex- 
ports and  freight  earnings.  These  resources 
were  now  largely  cut  off.  Exports  declined,  and 
imports  in  the  end  had  to  follow  them.  The  en- 

1  "  The  abundance  of  capital,  indicated  by  the  avidity  with  which 
loans  are  taken  at  the  reduced  rate  of  five  per  cent,  the  reduction  in  the 
wages  of  labor,  and  the  decline  in  the  price  of  property  cf  all  kinds,  all 
concur  favorably  for  domestic  manufactures." — CLAY,  Speech  in  2820. 
Works.  I.  419. 


26  PROTECTION  TO  YOUNG  INDUSTRIES. 

actment  of  the  English  corn-law,  and  the  general 
restriction  of  trade  and  navigation  by  England 
and  other  countries,  contributed  to  strengthen  this 
tendency,  and  thus  necessarily  served  to  stimu- 
late the  growth  of  manufactures  in  the  United 
States.  That  growth  was  indeed  complicated 
and  made  more  striking  by  the  revolution  which 
was  then  taking  place  in  many  departments  of 
manufacturing  industry.  Especially  in  the  pro- 
duction of  textile  fabrics,  machinery  was  rapidly 
displacing — in  England  had  already  largely  dis- 
placed— production  by  hand  and  on  a  small 
scale  ;  homespun  textiles  were  gradually  making 
room  for  the  products  of  the  spinning-jenny  and 
the  power-loom.  The  state  of  things  that  fol- 
lowed the  crisis  of  1818-19  was  favorable  to  the 
rise  of  manufactures  ;  but  the  change  took  place 
not  so  much  by  an  increase  in  the  relative  num- 
ber of  persons  engaged  in  such  occupations,  as 
in  the  substitution  of  manufactures  in  the  modern 
sense  for  the  more  simple  methods  of  the  pre- 
vious period.1 

1  According  to  the  census  returns  of  1820  and  1840,  the  only  two 
of  the  earlier  returns  in  which  occupations  are  enumerated,  there  were 
engaged  in  manufactures  and  the  mechanic  arts  in  1820, 13.7  per  cent  of 
the  working  population ;  in  1840,  17.1  per  cent.  In  New  England  21  per 
cent  were  so  engaged  in  1820,30.2  percent  in  1840;  In  the  Middle 
States  22.6  per  cent  in  1820,  28  per  cent  in  1840.  (MAC  GREGOR,  Prog- 
ress of  America,  II.  101.)  There  are  no  census  figures  before  1820. 
In  1807  it  was  loosely  estimated,  that  out  of  2,358,000  persons  actively 
employed,  230.000  were  engaged  in  mechanics  and  manufactures — less 
than  10  per  cent.  (BLODGETT,  Thoughts  on  a  Plan  of  Economy,  etc. 
[1807]  p.  6). 


INDUSTRIAL  HISTORY,  1789  —  1838.  27 

The  second  effect  of  the  change  that  followed 
the  financial  crisis  of  1819,  was  the  strong  pro- 
tective movement  which  exercised  so  impor- 
tant an  influence  on  the  political  history  of  the 
next  generation.  The  diminution  of  the  foreign 
demand,  and  the  fall  in  the  prices  of  staple 
products,  naturally  gave  rise  to  a  cry  for  a  home 
market.  The  absence  of  reciprocity  and  the 
restrictive  regulations  of  England,  especially  in 
face  of  the  comparatively  liberal  import  duties  of 
this  country,  furnished  an  effective  argument  to 
the  friends  of  protection.  Most  effective,  how- 
ever, was  the  argument  for  protection  to  young 
industries,  which  was  urged  with  persistency 
during  the  next  ten  or  fifteen  years.  It  is  not 
necessary  here  to  refer  more  at  length  to  the 
character  and  history  of  the  early  protective 
movement.  Its  effect  on  legislation  was  not 
merely  to  maintain  the  protective  provisions  of 
the  tariff  of  1816,  but  much  to  extend  the  protec- 
tive element  in  tariff  legislation.  Already  in 
1818  it  had  been  enacted  that  the  duty  of  25  per 
cent  on  cottons  and  woollens  should  remain  in 
force  till  1826,  instead  of  being  reduced  to  20  per 
cent  in  1819,  as  had  been  provided  by  the  act  of 
1816.  At  the  same  time  the  duty  on  all  forms  of 
unmanufactured  iron  was  considerably  raised  ;  a 
measure  to  which  we  shall  have  occasion  to  refer 
in  another  connection.  In  1820,  while  the  first 
pressure  of  the  economic  revulsion  bore  hard  on 


28  PROTECTION  TO  YOUNG  INDUSTRIES. 

the  people,  a  vigorous  attempt  was  made  to  pass 
a  high  protective  tariff;  it  barely  failed  of  suc- 
cess, by  a  single  vote  in  the  Senate.  In  1824  the 
protectionists  succeeded  in  passing  the  tariff  of 
that  year,  which  increased  all  duties  consider- 
ably. Four  years  later  the  protective  movement 
reached  its  highest  point,  and  in  the  tariff  of  1828 
brought  about  a  measure  which  exaggerated  the 
worst  features  of  the  protective  system.  The 
measures  which  followed  in  1832  and  1833  mod- 
erated the  peculiarly  offensive  provisions  of  the 
act  of  1828,  but  retained  the  essential  parts  of 
protection  for  some  years  longer.  On  the  whole, 
from  1816  on,  there  was  applied  for  some  twenty 
years  a  continuous  policy  of  protection  ;  for  the 
first  eight  years  with  much  moderation,  but  after 
1824  with  high  duties,  and  stringent  measures  for 
enforcing  them. 


in. 

HISTORY  OF  THE  COTTON  MANUFACTURE. 

We  turn  now  to  the  history  of  some  of  the  in- 
dustries to  which  protection  was  applied  during 
this  long  period,  in  order  to  determine,  so  far  as 
this  is  possible,  how  far  their  introduction  and 
early  growth  were  promoted  or  rendered  possible 
by  protection.  It  is  to  be  seen  how  far  and  with 
what  success  protection  to  young  industries  was 


THE  COTTON  MANUFACTURE.  29 

applied  to  them.  The  most  important  of  these 
industries,  both  on  account  of  its  magnitude  and 
of  the  peculiarly  direct  application  of  protection 
to  it,  is  the  cotton  manufacture  ;  and  of  the  early 
history  of  this,  we  fortunately  have,  at  the  same 
time,  the  fullest  and  most  trustworthy  accounts.1 
During  the  first  of  the  two  periods  into  which 
we  have  divided  the  early  economic  history  of 
the  United  States,  several  attempts  were  made  to 
introduce  the  manufacture  of  cotton  by  the  ma- 
chinery invented  by  Arkwright  and  Hargreaves 
in  the  latter  part  of  the  i8th  century.  One  or 
two  of  these  attempts  succeeded,  but  most  of 
them  failed ;  and  the  manufacture,  which  then 
was  growing  with  enormous  rapidity  in  England, 
failed  to  attain  any  considerable  development  in 
this  country.  In  1787  a  factory  using  the  new 
machinery  was  established  at  Beverly,  Mass., 
and  obtained  aid  from  the  State  treasury ;  but  it 
was  soon  abandoned.  Similar  unsuccessful 
ventures  were  made  at  Bridgewater,  Mass., 
Norwich,  Conn.,  and  Pawtucket,  R.  I.,  as  well 
as  in  Philadelphia.  The  spinning-jenny  was 
introduced  in  all  these,  but  never  successfully 
operated.2  The  first  successful  attempt  to  man- 

1  In  Mr.  S.  BATCHELDER'S  "Introduction  and  Early  Progress  of 
the  Cotton  Manufacture  in  the  U.  S."  (1863)  ;  G.  S.  WHITE'S  "  Memoir 
of  Samuel  Slater"  (1836);  and  MR.  N.  APPLETON'S  "Introduction  of 
the  Power-loom  and  Origin  of  Lowell"  (1858). 

2  BATCHELDER,  p.  26  seq. ;  WHITE,  ch.  III.  The  cotton-mill  at  Nor- 
wich, built  in  1790,  was  operated  for  ten  years,  and  then  abandoned  as 
unprofitable.  —  CAULKINS,  Hist,  of  Norwich,  p.  696. 


3O  PROTECTION    TO  YOUNG  INDUSTRIES. 

ufacture  with  the  new  machinery  was  made  by 
Samuel  Slater,  at  Pawtucket,  R.  I.  Slater  was  a 
workman  who  had  been  employed  in  Arkwright's 
factories  in  England.  He  joined  to  mechanical 
skill  strong  business  capacity.  He  had  become 
familiar  with  the  system  of  carding,  drawing, 
roving,  and  mule-spinning.  Induced  to  come  to 
the  United  States  in  1789  by  prizes  offered  by 
the  Philadelphia  Society  for  promoting  Manufac- 
tures, he  took  charge  in  the  following  year  of  a 
cotton-factory  which  had  been  begun  and  carried 
on,  with  little  success  by  some  Quakers  of  Paw- 
tucket.  He  was  successful  in  setting  up  the 
Arkwright  machinery,  and  became  the  founder 
of  the  cotton  manufacture  in  this  country. 
Through  him  machinery,  and  instruction  in  using 
it,  were  obtainable :  and  a  few  other  factories 
were  begun  under  his  superintendence.  Never- 
theless, the  manufacture  hardly  maintained  its 
hold.  In  1803  there  were  only  four  factories  in 
the  country.1  The  cotton  manufacture  was  at 
that  time  extending  in  England  at  a  rapid  rate  ; 
and  the  imports  of  cotton  goods  from  England 
were  large.  The  Treasury  reports  of  those  days 
give  no  separate  statements  of  the  imports  of  cot- 
ton goods  ;  but  in  1807  it  was  estimated  that  the 
imports  of  cotton  goods  from  England  amounted 
to  eleven  million  dollars'  worth — a  very  large 

1  BISHOP,  Hist,  of  Manufactures,  II.  102. 


THE  COTTON  MANUFACTURE.  31 

sum  for  those  days.1  The  consumption  of  cotton 
goods  was  large ;  but  only  an  insignificant  part 
of  it  was  supplied  by  home  production,  although 
later  developments  showed  that  this  branch  of 
industry  could  be  carried  on  with  distinct  success. 
The  ease  with  which  these  imports  were  paid 
for,  and  the  stimulus  which  this  period,  as  de- 
scribed in  the  preceding  pages,  gave  to  agri- 
culture and  commerce,  account  in  part  for  the 
slowness  with  which  the  domestic  manufacture 
developed.  The  fact  that  raw  cotton  was  not  yet 
grown  to  any  considerable  extent  in  the  country, 
together,  doubtless,  with  the  better  machinery 
and  larger  experience  and  skill  of  the  English, 
account  for  the  rest. 

When,  however,  the  period  of  restriction  be- 
gan, in  1808,  the  importation  of  foreign  goods 
was  first  impeded,  and  soon  entirely  prevented. 
The  domestic  manufacture  accordingly  extended 
with  prodigious  rapidity.  Already  during  the 
years  1804-8  greater  activity  must  have  pre- 
vailed ;  for  in  the  latter  year  fifteen  mills  had 
been  built,  running  8,000  spindles.  In  1809  the 
number  of  mills  built  shot  up  to  62,  with  31,000 
spindles  ;  while  25  more  mills  were  in  course  of 
erection.2  In  1812  there  were  50  factories 
within  thirty  miles  of  Providence,  operating 

1  See  the  pamphlet  by  BLODGETT  "On  a  Plan  of  Economy"  etc. 
'already  cited,  p.  26. 

2  Gallatin's  Report  on  Manufactures  in  1810 ;  Amer.  State  Papers, 
Finance,  II.  427. 


32  PROTECTION  TO  YOUNG  INDUSTRIES. 

nearly  60,000,  and  capable  of  operating  100,000 
spindles.1  During  the  war  the  same  rapid  growth 
continued,  rendered  possible  as  it  was  by  the  in- 
creasing supply  of  raw  cotton  from  the  South. 
The  number  of  spindles  was  said  to  be  80,000  in 
1811,  and  500,000  in  1815.  In  1800,  500  bales 
of  cotton  had  been  used;  in  1805,  1,000  bales. 
In  iSiothe  number  consumed  rose  to  10,000  ;  in 
1815,  it  was  9O,ooo.2  These  figures  cannot  be 
supposed  to  be  at  all  accurate ;  but  they  indi- 
cate clearly  an  enormously  rapid  development  of 
the  manufacture  of  cotton. 

The  machinery  in  almost  all  these  new  factor- 
ies was  for  spinning  yarn  only.  Weaving  was 
still  carried  on  by  the  hand-loom,  usually  by 
weavers  working  in  considerable  numbers  on 
account  for  manufacturers.  Toward  the  end  of 

1  WHITE,  p.  188. 

2  See  the  Report  of  a  Committee  of  Congress  on  the  Cotton  Manu- 
facture in  1816;  Am.  State  Papers,  Finance,  III,  82,  84.    This  estimate 
refers  only  to  the  cotton  consumed  in  factories,  and  does  not  include 
that  used  in  household  manufacture.      The  number  of  spindles  for 
1815,  as  given  in  this  report,  is  probably  much  too  large.    In  Woodbury's 
Report  of  1836  on  cotton,  the  number  of  spindles  in  use  in  factories  is 
given  as  follows :  — 


In  1805 
1807 
1809 
1810 
1815 
1820 
1821 
1825 


4,500  spindles. 
8,000 

31,000  " 
87,000 

130,000  " 

220,000  " 

230,000  *' 

800,000  " 


Exec.  Doc.  i  Sess.  24  Congr.,  No.  146,  p.  51,  It  need  not  be  said  that 
these  figures  are  hopelessly  loose ;  but  they  are  sufficient  to  support  the 
general  assertions  of  the  text. 


THE  COTTON  MANUFACTURE.  33 

the  war,  however,  a  change  began  to  be  made 
almost  as  important  in  the  history  of  textile  man- 
ufactures as  the  use  of  the  spinning-jenny  and 
mule  :  namely,  the  substitution  of  the  power-loom 
for  the  hand-loom.  The  introduction  of  the 
power-loom  took  place  in  England  at  about  the 
same  time,  and  some  intimation  of  its  use  seems 
to  have  reached  the  inventor  in  this  country, 
Francis  C.  Lowell.  He  perfected  the  machine, 
however,  without  any  use  of  English  models,  in 
the  course  of  the  year  1814.  In  the  same  year  it 
was  put  in  operation  at  a  factory  at  Waltham, 
Mass.  There  for  the  first  time  the  entire  process 
of  converting  cotton  into  cloth  took  place  under 
one  roof.  The  last  important  step  in  giving 
textile  manufactures  their  present  form  was  thus 
taken.1 

When  peace  was  made  in  1815,  and  imports 
began  again,  the  newly-established  factories,  most 
of  which  were  badly  equipped  and  loosely  man- 
aged, met  with  serious  embarrassment.  Many 
were  entirely  abandoned.  The  manufacturers 
petitioned  Congress  for  assistance ;  and  they 
received,  in  1816,  that  measure  of  help  which 
the  public  was  then  disposed  to  grant.  The 
tariff  of  1816  levied  a  duty  of  25  per  cent  on 
cotton  goods  for  three  years  ;  a  duty  considered 
sufficiently  protective  in  those  days  of  inexperi- 
ence in  protective  legislation.  At  the  same  time 
it  was  provided  that  all  cotton  cloths,  costing  less 
1  APPLETON,  pp.  7-11 ;  BATCHELDER,  pp.  60-70. 


34  PROTECTION  TO  YOUNG  INDUSTRIES. 

than  25  cents  a  yard,  should  be  considered  to 
have  cost  25  cents  and  be  charged  with  duty 
accordingly :  that  is,  should  be  charged  25  per 
cent  of  25  cents,  or  6J  cents  a  yard,  whatever 
their  real  value  or  cost.  This  was  the  first  of 
the  minimum  valuation  provisos  which  played 
so  considerable  a  part  in  later  tariff  legislation, 
and  which  have  been  maintained  in  large  part 
to  the  present  time.  A  similar  minimum  duty 
on  cotton-yarn  was  fixed.  At  the  time  at 
which  these  measures  were  passed,  the  mini- 
mum provisos  hardly  served  to  increase  appre- 
ciably the  weight  of  the  duty  of  25  per  cent. 
Coarse  cotton  cloths  were  then  worth  from  25  to 
30  cents,  and,  even  without  the  provisos,  would 
have  paid  little,  if  anything,  less  than  the  mini- 
mum duty.  But,  after  1818,  the  use  of  the  power- 
loom,  and  the  fall  in  the  price  of  raw  cotton, 
combined  greatly  to  reduce  the  prices  of  cotton 
goods.  The  price  of  coarse  cottons  fell  to  19 
cents  in  1819,  13  cents  in  1826,  and  8J  cents  in 
1829. *  The  minimum  duty  became  proportion- 
ately heavier  as  the  price  decreased,  and,  in  a 
few  years  after  its  enactment,  had  become  pro- 
hibitive of  the  importation  of  the  coarser  kinds 
of  cotton  cloths. 

During  the  years  immediately  after  the  war, 
the  aid  given  in  the  tariff  of  1816  was  not  suffi- 
cient to  prevent  severe  depression  in  the  cotton 
manufacture.     Reference  has  already  been  made 
1  APPLETON,  p.  16. 


THE  COTTON   MANUFACTURE.  35 

to  the  disadvantages  which,  under  the  circum- 
stances of  the  years  1815-18,  existed  for  all 
manufacturers  who  had  to  meet  competition  from 
abroad.  But  when  the  crisis  of  1818-19  had 
brought  about  a  re-arrangement  of  prices  more 
advantageous  for  manufacturers,  matters  began 
to  mend.  The  minimum  duty  became  more 
effective  in  handicapping  foreign  competitors. 
At  the  same  time  the  power-loom  was  generally 
introduced.  Looms  made  after  an  English 
model  were  introduced  in  the  factories  of  Rhode 
Island,  the  first  going  into  operation  in  1817  ; 
while  in  Massachusetts  and  New  Hampshire  the 
loom  invented  by  Lowell  was  generally  adopted 
after  I8I6.1  From  these  various  causes  the 
manufacture  soon  became  profitable.  There  is 
abundant  evidence  to  show  that  shortly  after  the 
crisis  the  cotton  manufacture  had  fully  recovered 
from  the  depression  that  followed  the  war.2  The 

1  APPLETON,  p.  13 ;  BATCHELDER,  pp.  70-73. 

2  The  following  passage,  referring  to  the  general  revival  of  manufac- 
tures, may  be  quoted :  "  The  manufacture  of  cotton  now  yields  a  mod- 
erate profit  to  those  who  conduct  the  business  with  the  requisite  skill 
and  economy.    The  extensive  factories  at  Pawtucket  are  all  in  opera- 
tion   In  Philadelphia  it  is  said  that  about  4,000  looms  have  been  put 

in  operation  within  the  last  six  months,  which  are  chiefly  engaged  in 
making  cotton  goods,  and  that  in  all  probability  they  will,  within  six 
months  more,  be  increased  to  four  times  that  number.     In  Patterson, 
N.  J.,  where,  two  years  ago,  only  three  out  of  sixteen  of  its  extensive 

factories  were  in  operation all  are  now  in  vigorous  employment." — 

NILES,  Register  (1821)  XXI.  39.    Compare  Ibid.  XXII.  225, 250  (1822)  ; 
XXIII.  35,  88   (1823)  ;   and  passim.      In  Woodbury's  cotton  report, 
cited  above,  it  is  said  (p.  57)  that  "there  was  a  great  increase  [in  cotton 
manufacturing]  in  1806  and  1807;  again  during  the  war  of  1812;  again 
from  1820  to  1825 ;  and  in  1831-32." 


36  PROTECTION  TO  YOUNG  INDUSTRIES. 

profits  made  were  such  as  to  cause  a  rapid  ex- 
tension of  the  industry.  The  beginning  of  those 
manufacturing  villages  which  now  form  the 
characteristic  economic  feature  of  New  England, 
falls  in  this  period.  Nashua  was  founded  in 
1823.  Fall  River,  which  had  grown  into  some 
importance  during  the  war  of  1815,  grew  rapidly 
from  1820  to  I83O.1  By  far  the  most  important 
and  the  best  known  of  the  new  ventures  in  cot- 
ton manufacturing  was  the  foundation  of  the 
town  of  Lowell,  which  was  undertaken  by  the 
same  persons  who  had  been  engaged  in  the 
establishment  of  the  first  power-loom  factory  at 
Waltham.  The  new  town  was  named  after  the 
inventor  of  the  power-loom.  The  scheme  of 
utilizing  the  falls  of  the  Merrimac,  at  the  point 
where  Lowell  now  stands,  had  already  been 
suggested  in  1821,  and  in  the  following  year 
the  Merrimac  Manufacturing  Company  was  in- 
corporated. In  1823  manufacturing  began,  and 
was  profitable  from  the  beginning ;  and  as  early 
as  1824,  the  future  growth  of  Lowell  was  clearly 
foreseen.2 

From  this  sketch  of  the  early  history  of  the 
cotton  manufacture  we  may  draw  interesting 

1  Fox's  History  of  Dunstable;  EARL'S  History  of  Fall  River, 
p.  20  seq. 

9  See  the  account  in  APPLETON,  pp.  17-25.  One  of  the  originators 
of  the  enterprise  said  in  1824 :  "If  our  business  succeeds,  as  we  have 
reason  to  expect,  we  shall  have  here  [at  Lowell]  as  large  a  population 
in  twenty  years  from  this  time,  as  there  was  in  Boston  twenty  years 
ago"  —  BATCHELDER,  p.  69. 


THE  COTTON  MANUFACTURE.  37 

conclusions.  Before  1808  the  difficulties  in  the 
way  of  the  introduction  of  this  branch  of  indus- 
try were  such  that  it  made  little  progress.  These 
difficulties  were  largely  artificial ;  and  though 
the  obstacles  arising  from  ignorance  of  the  new 
processes  and  from  the  absence  of  experienced 
workmen,  were  partly  removed  by  the  appear- 
ance of  Slater,  they  were  sufficient,  when  com- 
bined with  the  stimulus  which  the  condition  of 
foreign  trade  gave  to  agriculture  and  the  carry- 
ing trade,  to  prevent  any  appreciable  develop- 
ment. Had  this  period  come  to  an  end  without 
any  accompanying  political  change  —  had  there 
been  no  embargo,  no  non-intercourse  act,  and 
no  war  with  England  —  the  growth  of  the  cotton 
manufacture,  however  certain  to  have  taken 
place  in  the  end,  might  have  been  subject  to 
much  friction  and  loss.  Conjecture  as  to  what 
might  have  been  is  dangerous,  especially  in 
economic  history ;  but  it  seems  reasonable  to 
suppose,  that  if  the  period  before  1808  had  come 
to  an  end  quietly  and  without  a  jar,  the  eager 
competition  of  well-established  English  manu- 
facturers, the  lack  of  familiarity  with  the  pro- 
cesses, and  the  long-continued  habit,  especially 
in  New  England,  of  almost  exclusive  attention 
to  agriculture,  commerce,  and  the  carrying 
trade,  might  have  rendered  slow  and  difficult 
the  change,  however  inevitable  it  may  have 
been,  to  greater  attention  to  manufactures.  Un- 
der such  circumstances  there  might  have  been 


38  PROTECTION  TO  YOUNG  INDUSTRIES. 

room  for  the  legitimate  application  of  protection 
to  the  cotton  manufacture  as  a  young  industry. 
But  this  period,  in  fact,  came  to  an  end  with  a 
violent  shock,  which  threw  industry  out  of  its 
accustomed  grooves,  and  caused  that  striking 
growth  of  the  cotton  manufacture  from  1808  to 
1815  which  has  been  described.  The  transition 
caused  much  suffering  ;  but  it  took  place  sharply 
and  quickly.  The  interruption  of  trade  was 
equivalent  to  a  rude  but  vigorous  application 
of  protection,  which  did  its  work  thoroughly. 
When  peace  came,  in  1815,  it  found  a  large 
number  of  persons  and  a  great  amount  of  capi- 
tal engaged  irreversibly  in  the  cotton  manufac- 
ture, and  the  new  processes  of  manufacture 
introduced  on  an  extensive  scale.  Under  such 
circumstances  the  industry  was  certain  to  be 
maintained  if  it  were  for  the  economic  interest 
of  the  country  that  it  should  be  carried  on. 

The  duties  of  the  tariff  of  1816,  therefore, 
can  hardly  be  said  to  have  been  necessary. 
Nevertheless,  they  may  have  been  of  service. 
The  assistance  they  gave  was,  it  is  true,  insig- 
nificant in  comparison  with  the  shelter  from  all 
foreign  competition  during  the  war ;  and  most 
manufacturers  desired  much  higher  duties  than 
were  granted.1  It  is  true,  also,  that  the  minimum 

1  "In  1816  a  new  tariff  was  to  be  made.  The  Rhode  Island  manu- 
facturers were  clamorous  for  a  very  high  specific  duty.  Mr.  Lowell's 
views  on  the  tariff  were  much  more  moderate,  and  he  finally  brought 
Mr.  Lowndes  and  Mr.  Calhoun  to  support  the  minimum  of  64  cents  a 
yard,  which  was  carried."— APPLETON,  p.  13. 


THE  COTTON   MANUFACTURE.  39 

duty  on  cottons  was  least  effective  during  the 
years  immediately  after  the  war,  when  the  price 
of  cottons  was  higher,  and  the  duty  was  there- 
fore proportionately  le'ss  high.  But  these  years 
between  the  close  of  the  war  and  the  general 
fall  of  prices  in  1819  were  trying  for  the  man- 
ufacturers. The  normal  economic  state,  more 
favorable  for  them,  was  not  reached  till  the 
crisis  of  1818-19  was  well  over.  During  the 
intervening  years  the  minimum  duty  may  have 
assisted  the  manufacturers  without  causing  any 
permanent  charge  on  the  people.  The  fact  that 
careful  and  self-reliant  men,  like  the  founders 
of  the  Waltham  and  Lowell  enterprises,  were 
most  urgent  in  advising  the  adoption  of  the 
rates  of  1816  —  at  a  time,  too,  when  the  habit 
of  appealing  to  Congress  for  assistance  when  in 
distress  had  not  yet  become  general  among 
manufacturers  —  seems  to  show  that  those  rates 
were  of  service  in  encouraging  the  continuance 
of  the  manufacture.  How  seriously  its  progress 
would  have  been  impeded  or  retarded  by  the 
absence  of  duties,  cannot  be  said.  On  the 
whole,  although  the  great  impulse  to  the  in- 
dustry was  given  during  the  war,  the  duties  on 
cottons  in  the  tariff  of  1816  may  be  considered 
a  judicious  application  of  the  principle  of  pro- 
tection to  young  industries. 

Before  1824  the  manufacture,  as  we  have  seen, 
was  securely  established.     The  further  applica- 


40  PROTECTION  TO  YOUNG  INDUSTRIES. 

tion  of  protection  in  that  and  in  the  Following 
years  was  needless,  and,  so  far  as  it  had  any 
effect,  was  harmful.  The  minimum  valuation 
was  raised  in  1824  to  30  cents,  and  in  1828  to  35 
cents ;  the  minimum  duty  was  thereby  raised  to 
7J  and  8J  cents  respectively.  By  1824  the  man- 
ufacture had  so  firm  a  hold  that  its  further  ex- 
tension should  have  been  left  to  individual  enter- 
prise, which  by  that  time  might  have  been  relied 
on  to  carry  the  industry  as  far  as  it  was  for  the 
economic  interest  of  the  country  that  it  should 
be  carried.  The  increased  duties  of  1824  and 
1828  do  not  come  within  the  scope  of  the  argu- 
ment for  protection  to  young  industries. 


IV. 

THE  WOOLLEN  MANUFACTURE. 

The  sudden  and  striking  growth  of  the  cotton 
manufacture  in  the  last  hundred  years  has  caused 
its  history,  in  this  country  as  in  others,  to  be 
written  with  comparative  fulness.  Of  the  early 
history  of  the  manufacture  of  woollen  goods  in 
the  United  States  we  have  but  scanty  accounts ; 
but  these  are  sufficient  to  show  that  the  general 
course  of  events  was  similar  to  that  in  cotton 
manufacturing.  During  the  colonial  period  and 
the  years  immediately  after  the  Revolution,  such 


THE  WOOLLEN  MANUFACTURE.  41 

woollen  cloths  as  were  not  spun  and  woven  in 
households  for  personal  use  were  imported  from 
England.  The  goods  of  household  manufacture, 
however,  formed,  and  for  many  years  after  the 
introduction  of  machinery  continued  to  form,  by 
far  the  greater  part  of  those  in  use.  The  first 
attempt  at  making  woollens  in  large  quantities  is 
said  to  have  been  made  at  Ipswich,  Mass.,  in 
1792  ;  but  no  machinery  seems  to  have  been 
used  in  this  undertaking.  In  1794  the  new  ma- 
chinery was  for  the  first  time  applied  to  the 
manufacture  of  wool ;  and  it  is  noteworthy  that, 
as  in  the  case  of  the  cotton  manufacture,  the  ma- 
chinery was  introduced  by  an  English  workman. 
This  was  Arthur  Scholfield,  who  came  to  the 
United  States  in  1790,  and  in  the  next  year 
established  a  factory  at  Pittsfield,  Mass.  His 
machinery  seems,  however,  to  have  been  ex- 
clusively for  carding  wool,  and  for  dressing 
(fulling)  woollen  goods  ;  and  for  the  latter  pur- 
pose it  was  probably  in  no  way  different  from 
that  of  the  numerous  fulling-mills  which  were 
scattered  over  the  country  during  colonial  times. 
Spinning  and  weaving  were  done,  as  before,  on 
the  spinning-wheel  and  the  hand-loom.  Schol- 
field introduced  carding-machinery  in  place  of 
the  hand-cards,  and  seems  to  have  carried  on  his 
business  with  success.  He  joined  to  it  that  of 
making  carding-machines  for  sale.  His  exam- 
ple, however,  was  followed  by  few.  Carding- 


42  PROTECTION  TO  YOUNG  INDUSTRIES. 

machines  were  introduced  in  a  few  other  places 
between  1800  and  1808 ;  but  no  development  of 
the  business  of  systematically  making  cloth,  or 
preparing  wool  for  sale,  took  place.  The  appli- 
cation of  machinery  for  spinning  does  not  seem 
to  have  been  made  at  all.1  One  great  difficulty  in 
the  way  of  the  woollen  manufacture  was  the 
deficient  supply  and  poor  quality  of  wool.  The 
means  of  overcoming  this  were  supplied  when  in 
1802  a  large  flock  of  fine  merino  sheep  was  im- 
ported from  Spain,  followed  in  1809  and  1810  by 
several  thousand  pure  merinos  from  the  same 
country.2 

When  the  period  of  restriction  began  in  1808, 
the  woollen  manufacture  received,  like  all  other 
industries  in  the  same  position,  a  powerful  stimu- 
lus. The  prices  of  broadcloth,  then  the  chief 
cloth  worn  besides  homespun,  rose  enormously, 
as  did  those  of  flannels,  blankets,  and  other 
goods,  which  had  previously  been  obtained  almost 
exclusively  by  importation.  We  have  no  such 
detailed  statements  as  are  given  of  the  rise  of 
the  cotton  manufacture.  It  is  clear,  however, 
that  the  manufacture  of  woollen  goods,  which 
had  had  no  real  existence  before,  began,  and 
was  considerably  extended.  The  spinning  of 
wool  by  machinery  was  introduced,  and  goods 

1  See  a  sketch  of  the  early  history  of  the  wool  manufacture  in  Bulletin 
National  Ass.  of  Wool  Manufacturers,  II.  478-488.     Cf.  the  scattered 
notices  in  BISHOP,  Hist,  of  Manufactures,  I.  421  and  II.  106,  109, 118,  etc. 

2  BISHOP,  II.  94,  134. 


THE  WOOLLEN  MANUFACTURE.  43 

were  made  for  sale  on  a  large  scale.  Already  in 
1810  the  carding  and  spinning  of  wool  by  ma- 
chinery was  begun  in  some  of  the  cotton  mills 
in  Rhode  Island.1  In  Northampton,  Mass., 
Oriskany,  N.  Y.,  and  other  places,  large  estab- 
lishments for  the  manufacture  of  woollen  goods 
and  of  satinets  (mixed  cotton  and  woollen  goods) 
sprang  up.  The  value  of  woollen  goods  made 
in  factories  is  said  to  have  risen  from  $4,000,000 
in  1810  to  $19,000,000  in  1815. 2 

After  1815  the  makers  of  woollens  naturally 
encountered  great  difficulties  in  face  of  the  re- 
newed and  heavy  importations  of  English  goods. 
The  tariff  of  1816  gave  them  the  same  duty 
that  was  levied  on  cottons,  —  25  per  cent, — 
to  be  reduced  in  three  years  to  20  per  cent. 
The  reduction  of  the  duty  to  20  per  cent,  which 
was  to  have  taken  place  in  1819,  was  then  post- 
poned, and  in  the  end  never  took  place.  No 
minimum  valuation  was  fixed  for  woollen  goods  ; 
hence  there  was  not,  as  for  cotton  goods,  a  min- 
imum duty.  Wool  was  admitted  at  a  duty  of 
15  per  cent.  The  scheme  of  duties,  under  the 
tariff  of  1816,  thus  afforded  no  very  vigorous 
protection.  The  provisions  of  the  act  of  1824 
did  not  materially  improve  the  position  of  the 
woollen  manufacturers.  The  duty  on  woollen 
goods  was  in  that  act  raised  to  30  per 

1  Gallatin's  Report  of  1810;  Am.  State  Papers,  Finance,  II.  427. 

2  Bulletin  Wool  Manufacturers,  II.  486.    This  is  hardly  more  than 
a  loose,  though  significant,  guess. 


44  PROTECTION  TO  YOUNG  INDUSTRIES. 

cent  in  the  first  instance,  and  to  33^  per  cent 
after  1825.  At  the  same  time  the  duty  on  wool 
(except  that  costing  ten  cents  a  pound  or  less) 
was  raised  to  20  per  cent  in  the  first  place, 
to  25  per  cent  after  1825,  and  to  30  per  cent 
after  1826.  If  foreign  wool  had  to  be  imported 
to  supplement  the  domestic  supply,  —  and  such 
a  necessity  has  constantly  existed  in  this  country 
since  1816, —  the  increased  price  of  wool  in  this 
country,  as  compared  with  other  countries  which 
admitted  wool  free  or  at  a  lower  duty,  would 
evidently  render  the  net  effectual  protection  to 
woollen  manufacturers  far  from  excessive. 

Notwithstanding  the  very  moderate  encour- 
agement given  from  1816  to  1828,  the  woollen 
manufacture  steadily  progressed  after  the  crisis 
of  1819,  and  in  1828  was  securely  established. 
During  the  years  from  the  close  of  the  war  till 
1819  much  embarrassment  was  felt,  and  many 
establishments  were  given  up ;  but  others  tided 
over  this  trying  time.1  After  1819  the  industry 
gradually  responded  to  the  more  favorable  influ- 
ences which  then  set  in  for  manufactures,  and 
made  good  progress.  During  1821  and  1822 
large  investments  were  made  in  factories  for 
making  woollen  cloths,  especially  in  New  Eng- 
land.2 In  1823  the  manufacturers  of  woollens  in 

1  We  have,  for  instance,  accounts  of  a  large  factory  in  Northampton, 
Mass.,  built  in  1809  (BISHOP,  II.  136),  and  still  in  operation  in  1828 
(Am.  St.  Papers,  Finance,  V.  815). 

2  BISHOP,  II.  270,  294;  NlLES,  Register,  XXII.  225. 


THE  WOOLLEN   MANUFACTURE.  45 

Boston  were  sufficiently  numerous  to  form  an 
independent  organization  for  the  promotion  of 
their  own  purposes  ;  these  being,  in  the  present 
case,  to  secure  higher  protective  duties.1  The 
best  evidence  which  we  have  of  the  condition 
of  the  industry  during  these  years  is  to  be  found 
in  the  testimony  given  in  1828  by  various  wool- 
len manufacturers  before  the  Committee  of  the 
House  of  Representatives  on  Manufactures. 
This  testimony  shows  clearly  that  the  industry 
was  established  in  1828  on  such  a  scale  that 
the  difficulties  arising  from  lack  of  skill  and 
experience,  unfamiliarity  with  machinery  and 
methods,  and  other  such  temporary  obstacles, 
had  no  longer  influence  in  preventing  its  growth.2 
The  capital  invested  by  the  thirteen  manufac- 
turers who  testified  before  this  Committee  varied 
from  $20,000  to  $200,000;  the  average  was 
$85,000.  The  quantity  of  wool  used  by  each 
averaged  about  62,000  pounds  per  year.  These 
figures  indicate  a  scale  of  operation  very  con- 
siderable for  those  days.  Six  of  the  factories 
referred  to  had  been  established  between  1809 
and  1815.  With  the  possible  exception  of  one, 
in  regard  to  which  the  date  of  foundation  was 
not  stated,  none  had  been  established  in  the 
years  between  1815  and  1820;  the  remaining  six 
had  been  built  after  1820.  Spinning-machin- 

1   NILES,  XXV.  I48,  189. 

8  The  testimony  is  printed  in  full  in  American  State  Papers,  Finance, 
V.  792-832. 


46  PROTECTION  TO  YOUNG  INDUSTRIES. 

ery  was  in  use  in  all.  Some  used  power-looms, 
others  hand-looms.  The  application  of  the 
power-loom  to  weaving  woollens,  said  one  man- 
ufacturer, had  been  made  in  the  United  States 
earlier  than  in  England.1  An  indication,  similar 
to  this,  of  the  point  reached  by  the  American 
producers  in  the  use  of  machinery,  was  afforded 
by  the  difference  of  opinion  in  regard  to  the 
comparative  merits  of  the  jenny,  and  of  the 
"Brewster,"  a  spinning-machine  of  recent  in- 
vention. Goods  of  various  kinds  were  made  — 
broadcloths,  cassimeres,  flannels,  satinets,  and 
kerseys.  The  opinion  wras  expressed  by  several 
that  the  mere  cost  of  manufacturing  was  not 
greater  in  the  United  States  than  in  England ; 
that  the  American  manufacturer  could  produce, 
at  as  low  prices  as  the  English,  if  he  could 
obtain  his  wool  at  as  low  prices  as  his  foreign 
competitor.2  This  testimony  seems  to  show 

1  Testimony,  p.  824.     The  same  statement  is  made  by  BISHOP, 
II.  317- 

2  "  Broadcloths  are  now  (1828)  made  at  much  less  expense  of  labor 
and  capital  than  in  1825,  by  the  introduction  of  a  variety  of  improved 
and  labor-saving  machinery,  amongst  which  may  be  named  the  dressing- 
machine  and  the  broad  power-loom  of  American  invention."    (p.  824.) 
The  power-loom  was  very  generally  used.    "  Since  the  power-looms 
have  been  put  in  operation  the  weaving  costs  10  cents  per  yard,  instead 
of  from  18  to  28  cents."     (p.  814.)     Shepherd  of  Northampton,  to 
whose  factory  reference  has  already  been  made  (ante  p.  44,  note  i), 
said  :    "  The  difference  in  price  of  cloths  (in  the  United  States  and  in 
England)  would  be  the  difference  in  the  price  of  the  wool,  as,  in  my 
opinion,  we  can  manufacture  as  cheap  as  they  (the  English)  can"  (p.  816.) 
In  the  same  connection  another    manufacturer  said :    "  The  woollen 
manufacture  is  not  yet  fairly  established  in  this  country,  but  /  know  no 


THE  WOOLLEN  MANUFACTURE.  47 

conclusively,  that  at  the  time  when  it  was  given, 
the  woollen  manufacture  had  reached  that  point 
at  which  it  might  be  left  to  sustain  itself — at 
which  accidental  or  artificial  obstacles  no  longer 
stood  in  the  way  of  its  growth.  Progress  had 
been  less  certain  and  rapid  than  in  the  case  of 
the  kindred  cotton  manufacture ;  for  the  condi- 
tions of  production  were  less  distinctly  favorable. 
The  displacement  of  the  household-products  by 
those  of  the  factory,  was  necessarily  a  gradual 
process,  and  made  the  advance  of  the  woollen 
manufacture  normally  more  slow  than  that  of 
the  kindred  industry.  But  the  growth  of  the 
cotton  manufacture,  so  similar  to  that  of  wool, 
of  itself  removed  many  of  the  obstacles  arising 
from  the  recent  origin  of  the  latter.  The  use 
of  machinery  became  common,  and,  when  the 
first  great  steps  had  been  taken,  was  transferred, 
with  comparative  ease,  from  one  branch  of  tex- 
tile production  to  another.  In  1828,  when  for 
the  first  time  heavy  protection  was  given  by 
a  complicated  system  of  minimum  duties,  and 

reason  why  we  cannot  manufacture  as  well  and  as  cheap  as  they  can  tn 
England,  except  the  difference  in  the  price  of  labor,  for  which,  in  my 
opinion,  we  are  fully  compensated  by  other  advantages.  Our  difficul- 
ties are  not  the  cost  of  manufacturing,  but  the  great  fluctuations  in  the 
home  market,  caused  by  the  excessive  and  irregular  foreign  importa- 
tions. The  high  prices  we  pay  for  labor  are,  in  my  opinion,  beneficial 
to  the  American  manufacturer,  as  for  those  wages  we  get  a  much  better 
selection  of  hands,  and  those  capable  and  willing  to  perform  a  much 
greater  amount  of  labor  in  a  given  time.  The  American  manufacturer 
also  uses  a  larger  share  of  labor-saving  machinery  than  the  English." 
(p.  829.) 


48  PROTECTION   TO   YOUNG   INDUSTRIES. 

the  actual  rates  levied  rose,  in  some  cases,  to 
over  100  per  cent,  this  aid  was  no  longer  needed 
to  sustain  the  woollen  manufacture.  The  period 
of  youth  had  then  been  past. 

It  appears  that  direct  protective  legislation 
had  even  less  influence  in  promoting  the  intro- 
duction and  early  growth  of  the  woollen  manu- 
facture than  of  the  cotton  manufacture.  The 
events  of  the  period  of  restriction,  from  1808  to 
1815,  led  to  the  first  introduction  of  the  industry, 
and  gave  it  the  first  strong  impulse.  Those 
events  may  indeed  be  considered  to  have  been 
equivalent  to  effective,  though  crude  and  waste- 
ful, protective  legislation ;  and  it  may  be  that 
their  effect,  as  compared  with  the  absence  of 
growth  before  1808,  shows  that  protection  in 
some  form  was  needed  to  stimulate  the  early 
growth  of  the  woollen  manufacture.  But,  by 
1815,  the  work  of  establishing  the  manufacture 
had  been  done.  The  moderate  duties  of  the 
period  from  1816  to  1828,  partly  neutralized  by 
the  duties  on  wool,  may  have  done  something 
to  sustain  it;  but  the  position  gained  in  1815 
would  hardly  have  been  lost  in  the  absence  01 
these  duties.  By  1828,  when  strong  protection 
was  first  given,  a  secure  position  had  certainly 
been  reached. 


THE  IRON  MANUFACTURE.  49 


V. 

THE  IRON  MANUFACTURE. 

We  turn  now  to  the  early  history  of  the  iron 
manufacture,  —  the  production  of  crude  iron, 
pig  and  bar.  We  shall  examine  here  the  pro- 
duction, not  of  the  finished  article,  but  of  the 
raw  material.  It  is  true  that  the  production  of 
crude  iron  takes  place  under  very  different 
conditions  from  those  which  influence  the  pro- 
duction of  cotton  and  woollen  goods.  The 
production  of  iron  is  an  extractive  industry,  sub- 
ject, under  ordinary  circumstances,  to  the  law 
of  diminishing  returns ;  and  to  commodities 
produced  under  the  conditions  of  that  law,  the 
argument  for  protection  to  young  industries  has 
not  been  supposed,  at  least  by  its  more  rnoderate 
advocates,  to  apply.1  It  happens,  however,  that 
changes  in  the  processes  of  production,  anal- 
ogous to  those  w'hich  took  place  in  the  textile 
manufactures,  were  made  at  about  the  same 
time  in  the  production  of  crude  iron  ;  and  these 
changes  rendered  more  possible  the  application 
of  the  principle  of  protection  to  young  indus- 
tries, and  make  the  discussion  of  its  application 
more  pertinent.  There  is  another  reason  why 

1  See,  for  instance,  LIST,  System  #f  National  Economy,  Phila.  1856^ 
p.  296-300. 


50  PROTECTION    TO   YOUNG    INDUSTRIES. 

we  should  consider,  in  this  connection,  the  raw 
material  rather  than  the  finished  articles.  The 
production  of  the  latter,  of  the  tools  and  imple- 
ments made  of  iron,  has  not  needed  protection 
in  this  country,  nor  has  protection  often  been 
asked  for  it.  The  various  industries  by  which 
crude  iron  is  worked  into  tools  and  consumable 
articles  were  firmly  established  already  in  the 
colonial  period,  and  since  then  have  maintained 
themselves  with  little  difficulty.  The  controversy 
on  the  protection  of  the  iron  manufacture  has  been 
confined  almost  exclusively  to  the  production  of 
pig  and  bar  iron.  It  is  to  this,  therefore,  that 
we  will  direct  our  attention.  The  production 
of  pig  and  bar  iron  will  be  meant  when,  in  the 
following  pages,  the  wiron  manufacture"  is 
spoken  of. 

During  the  eighteenth  century  England  was  a 
country  importing,  and  not,  as  she  is  now,  one 
exporting  crude  iron.  The  production  of  pig 
and  bar  iron  wras  accordingly  encouraged  in  her 
colonies ;  and  production  was  carried  on  in  them 
to  an  extent  considerable  for  those  days.  Large 
quantities  of  bar  iron  were  exported  from  the 
American  colonies  to  England.1  The  manufac- 
ture of  iron  was  firmly  established  in  the  colo- 
nies according  to  the  methods  common  at  the 

1  See  the  tables  in  BISHOP  I.  626,  and  SCRIVENOR,  Histoty  of  the  Iron 
Trade,  p.  81.  In  1740  the  total  quantity  of  iron  produced  in  England 
was  about  17,000  tons ;  at  that  time  from  2000  to  3000  tons  annually  were, 
regularly  imported  from  the.  American  colonies. 


THE   IRON    MANUFACTURE.  51 

time.  During  the  middle  and  end  of  the  eigh- 
teenth century,  however,  the  great  change  took 
place  in  England  in  the  production  of  iron  which 
has  placed  that  country  in  its  present  position 
among  iron-making  countries,  and  has  exercised 
so  important  an  influence  on  the  progress  of 
modern  civilization.  Up  to  that  time  charcoal 
had  been  exclusively  used  for  smelting  iron,  and 
the  iron  manufacture  had  tended  to  fix  itself  in 
countries  where  wood  was  abundant,  like  Nor- 
way, Sweden,  Russia,  and  the  American  colo- 
nies. About  1750  the  use  of  coke  in  the  blast 
furnace  began.  The  means  were  thus  given 
for  producing  iron  in  practically  unlimited  quan- 
tities, without  dependence  for  fuel  on  forests 
easily  exhaustible  ;  and  in  the  latter  part  of  the 
century,  when  the  steam-engine  supplied  the 
motive  power  for  the  necessary  strong  blast, 
production  by  means  of  coke  increased  with 
great  rapidity.1  At  the  same  time,  in  1783  and 
1784,  came  the  inventions  of  Cort  for  puddling 
and  rolling  iron.  By  these  the  transformation 
of  pig-iron  into  bar-iron  of  convenient  sizes  was 
effected  in  large  quantities.  Before  the  inven- 
tions of  Cort,  pig-iron  had  been  first  converted 
into  bar  under  the  hammer,  and  the  bar,  at  a 
second  distinct  operation  in  a  slitting  mill,  con- 
verted into  bars  and  rods  of  convenient  size. 


1  See  the  good  account  of  the  importance  of  the  use  of  coke  (coal) 
in  JEVONS,  The  Coal  Question,  ch.  XV.  pp.  309-316. 


52  PROTECTION    TO   YOUNG    INDUSTRIES. 

The  rolled  bar  made  by  the  processes  of  pud- 
dling and  rolling  —  which  are  still  in  common 
use  —  is  inferior  in  quality,  at  least  after  the  first 
rolling,  to  the  hammered  and  slit  iron,  known  as 
hammered  bar,  produced  by  the  old  method. 
Cort's  processes,  however,  made  the  iron  much 
more  easily  and  cheaply ;  and  the  lower  price  of 
the  rolled  iron  for  most  purposes  more  than  com- 
pensated for  its  inferior  quality.  At  the  same 
time  these  processes  made  easy  and  fostered  the 
change  from  production  on  a  small  to  production 
on  a  large  scale.  This  tended  to  bring  about 
still  greater  cheapness,  and  made  the  revolution 
in  the  production  of  iron  as  great  as  that  in  the 
textile  industries,  and  similar  to  it  in  many  im- 
portant respects. 

During  the  period  1789-1808  these  changes  in 
the  iron  manufacture  were  too  recent  to  have  any 
appreciable  effect  on  the  conditions  of  production 
and  supply  in  the  United  States.  The  manufac- 
ture of  iron,  and  its  transformation  into  imple- 
ments of  various  kinds,  went  on  without  change 
from  the  methods  of  the  colonial  period.  Pig- 
iron  continued  to  be  made  and  converted  into 
hammered  bar  in  small  and  scattered  works  and 
forges.1  No  pig-iron  seems  to  have  been  import- 
ed. Bar-iron  was  imported,  in  quantities  not 
inconsiderable,  from  Russia  ;2  but  no  crude  iron 

1  FRENCH,  Hist,  of  Iron  Manufacture,  p.  16. 
8  Ibid.,  p.  13. 


THE    IRON    MANUFACTURE.  53 

was  imported  from  England.  The  importations 
of  manufactures  of  iron,  of  nails,  spikes,  anchors, 
cables,  and  other  articles,  showed  a  perceptible 
increase  during  this  period.1  Whether  this  in- 
crease was  the  result  of  the  general  conditions 
which  tended  to  swell  imports  during  this  period, 
or  was  the  first  effect  of  the  new  position  which 
England  was  taking  as  an  iron-making  country, 
cannot  be  determined.  Information  on  the  state 
of  the  industry  during  this  period  is  meagre  ; 
but  it  seems  to  have  been  little  affected  by  the 
protective  duties  which  Congress  enacted  on 
nails,  steel,  and  some  other  articles.  No  protec- 
tion was  attempted  to  be  given  to  the  production 
of  pig  or  bar  iron ;  for  it  was  thought  that  the 
domestic  producers  would  be  able  to  compete 
successfully  with  their  foreign  competitors  in 
this  branch  of  the  iron-trade. 

During  the  period  of  restriction  from  1808  to 
1815,  the  iron  and  manufactures  of  iron  previ- 
ously imported,  had  to  be  obtained,  as  far  as 
possible,  at  home.  A  large  increase  in  the 
quantity  of  iron  made  in  the  country  accordingly 
took  place.  The  course  of  events  was  so  simi- 
lar to  that  already  described  in  regard  to  textile 
manufactures  that  it  need  not  be  referred  to  at 
length.  When  peace  came,  there  were  unusu- 
ally heavy  importations  of  iron ;  prices  fell 

1  The  imports  of  iron,  so  far  as  separately  stated  in  the  Treasury 
reports,  may  be  found  in  YOUNG'S  Report  on  Tariff  Legislation,  pp. 
xxvi-xxxvi.  Cp.  GROSVENOR,  Does  Protection  Protect,  pp.  ^74-175. 


54  PROTECTION    TO   YOUNG    INDUSTRIES. 

rapidly ;  and  the  producers  had  to  go  through  a 
period  of  severe  depression. 

In  1816  Congress  was  asked  to  extend  pro- 
tection to  the  manufacture  of  iron,  as  well  as 
to  other  industries.  The  tariff  of  1816  imposed 
a  duty  of  45  cents  a  hundred-weight  on  ham- 
mered-bar  iron,  and  one  of  $1.50  a  hundred- 
weight on  rolled  bar,  with  corresponding  duties 
on  sheet,  hoop,  and  rod  iron.  Pig-iron  was 
admitted  under  an  ad  'valorem  duty  of  20  per 
cent.  At  the  prices  of  bar-iron  in  1816,  the 
specific  duty  on  hammered  bar  was  equivalent 
to  about  20  per  cent,1  and  was,  therefore,  but 
little  higher  than  the  rates  of  15  and  iyj  per 
cent  levied  in  1804  and  1807.  The  duty  on 
rolled  bar  was  much  higher,  relatively  to  price 
as  well  as  absolutely,  than  that  on  hammered 
bar,  and  was  the  only  one  of  the  iron  duties  of 
1816  which  gave  distinct  and  vigorous  protection. 
These  duties  were  not  found  sufficient  to  pre- 
vent the  manufacturers  from  suffering  heavy 
losses  ;  more  effective  protection  was  demanded. 
In  1818  Congress,  by  a  special  act,  raised  the 
duties  on  iron  considerably,  at  the  same  time 
that,  as  was  noted  above2,  it  postponed  the  reduc- 
tion from  25  to  20  per  cent  of  the  duty  on  cottons 
and  woollens.  Both  of  these  measures  were  con- 
cessions to  protective  feeling ;  they  may  have 

1  See  the  tables  of  prices  in  FRENCH,  pp.  35,  36. 
3  Ante  p.  27. 


THE  IRON  MANUFACTURE. 


55 


been  the  result  of  an  uneasy  consciousness  of  the 
disturbed  state  of  the  country  and  of  the  demand 
for  protection  which  was  to  follow  the  financial 
crisis  of  the  next  year.1  The  act  of  1818  fixed  the 
duty  on  pig-iron  at  50  cents  per  hundred-weight 
•^— the  first  specific  duty  imposed  on  pig-iron; 
hammered  bar  was  charged  with  75  cents  a 
hundred-weight,  instead  of  45  cents  as  in  1816; 
and  higher  duties  were  fixed  on  castings,  anchors, 
nails  and  spikes.2  These  duties  were  compara- 
tively heavy ;  and,  with  the  steady  fall  in  the 
price  of  iron,  especially  after  the  crisis  of  1818- 
19,  they  became  proportionally  heavier  and 
heavier.  Nevertheless,  in  the  tariff  of  1824  they 
were  further  increased.  The  rate  on  hammered 
bar  went  up  to  90  cents  a  hundred-weight ;  that 
on  rolled  bar  still  remained  at  $1.50,  as  it  had 
been  fixed  in  1816.  In  1828  a  still  further  in- 
crease was  made  in  the  specific  duties  on  all 
kinds  of  iron,  although  the  continual  fall  in 
prices  was  of  itself  steadily  increasing  the  weight 
of  the  existing  duties.  The  duty  on  pig-iron 
went  up  to  62^  cents  a  hundred-weight ;  that  on 
hammered  bar  to  a  cent  a  pound  (that  is,  $1.12  a 
hundred-weight)  ;  that  on  rolled  bar  to  $37  a 
ton.  In  1832  duties  were  reduced,  in  the  main 
to  the  level  of  those  of  1824;  and  in  1833  the 

1  There  is  nothing  in  the  Congressional  Debates  on  the  acts  of  1818 
to  show  what  motives  caused  them  to  be  passed. 

2  Statutes  at  Large,  III.  460. 


56  PROTECTION  TO  YOUNG  INDUSTRIES. 

Compromise  Act,  after  maintaining  the  duties  of 
1832  for  two  years,  gradually  reduced  them  still 
further,  till  in  1842  they  reached  a  uniform  level 
of  20  per  cent.  On  the  whole,  it  is  clear  that 
after  1818  a  system  of  increasingly  heavy  pro- 
tection was  applied  to  the  iron  manufacture,  and 
that  for  twenty  years  this  protection  was  main- 
tained without  a  break.  From  1818  till  1837  or 
1838,  when  the  reductions  of  duty  under  the 
Compromise  Act  began  to  take  effect  to  an  appre- 
ciable extent,  the  duties  on  iron  in  its  various 
forms  ranged  from  40  to  100  per  cent  on  the 
value. 

It  is  worth  while  to  dwell  for  a  moment  on  the 
heavy  duty  on  rolled  iron  —  much  higher  than 
that  on  hammered  iron — which  was  adopted  in 
1816,  and  maintained  throughout  this  period. 
Congress  attempted  to  ward  off  the  competition 
of  the  cheaper  rolled  iron  by  this  heavy  discrim- 
inating duty,  which  in  1828  was  equivalent  to 
100  per  cent  on  the  value.  When  first  established 
in  1816,  the  discrimination  was  defended  on  the 
ground  that  the  rolled  iron  was  of  inferior  qual- 
ity, and  that  the  importation  of  the  unserviceable 
article  should  be  impeded  for  the  benefit  of  the 
consumer.  The  scope  of  the  change  in  the  iron 
manufacture,  of  which  the  appearance  of  rolled 
iron  was  one  sign,  was  hardly  understood  in 
1816  and  1818  ;  and  this  argument  against  its  use 
may  have  represented  truthfully  the  animus  of 


THE  IRON  MANUFACTURE.  57 

the  discriminating  duty.  But  in  later  years  the 
wish  to  protect  the  consumer  from  impositions 
hardly  continued  to  be  the  motive  for  retaining 
the  duty.  Rolled  bar-iron  soon  became  an  arti- 
cle well  known  and  of  considerable  importance 
in  commerce.  The  discriminating  duty  was  re- 
tained throughout,  in  1828  even  increased;  it 
was  still  levied  in  the  tariff  of  1832  ;  it  reap- 
peared when  the  Whigs  carried  the  tariff  of 
1842  ;  and  it  did  not  finally  disappear  till  1846. 
The  real  motive  for  maintaining  the  heavy  tax 
through  these  years  undoubtedly  was  the  unwil- 
lingness of  the  domestic  producers  to  face  the 
competition  of  the  cheaper  article.  The  tax  is  a 
clear  illustration  of  that  tendency  to  fetter  and 
impede  the  progress  of  improvement  which  is 
inherent  in  protective  legislation.  It  laid  a  con- 
siderable burden  on  the  community  ;  and,  as  we 
shall  see,  it  was  of  no  service  in  encouraging  the 
early  growth  of  the  iron  industry.  It  is  curious 
to  note  that  the  same  contest  against  improved 
processes  was  carried  on  in  France,  by  a  dis- 
criminating duty  on  English  rolled  iron,  levied 
first  in  1816,  and  not  taken  off  till  i860.1 

After  1815  the  iron-makers  of  the  United 
States  met  with  strong  foreign  competition  from 
two  directions.  In  the  first  place,  English  pig 
and  rolled  iron  was  being  produced  with  steadily 
decreasing  cost.  The  use  of  coke  became  uni- 

1  AME,  Etudes  sur  le-s  tarifs  de  Douane,  1. 145. 


58  PROTECTION  TO  YOUNG  INDUSTRIES. 

versal  in  England,  and  improvements  in  methods 
of  production  were  constantly  made.  Charcoal 
continued  to  be  used  exclusively  in  the  furnaces 
of  this  country  ;  for  the  possibility  of  using  an- 
thracite had  not  yet  been  discovered,  and  the 
bituminous  coal  fields  lay  too  far  from  what  was 
then  the  region  of  dense  population  to  be  avail- 
able. While  coke-iron  was  thus  driving  out 
charcoal-iron  for  all  purposes  for  which  the  for- 
mer could  be  used,  the  production  of  charcoal- 
iron  itself  encountered  the  competition  of  Sweden 
and  Russia.  As  the  United  States  advanced  in 
population,  the  more  accessible  forests  became 
exhausted,  and  the  greater  quantity  of  charcoal- 
iron  needed  with  the  increase  of  population  and 
of  production,  could  be  obtained  at  home  only  at 
higher  cost.  The  Scandinavian  countries  and 
Russia,  with  large  forests  and  a  population  con- 
tent with  low  returns  for  labor,  in  large  part  sup- 
plied the  increased  quantity  at  lower  rates  than 
the  iron-makers  of  this  country.  Hence  the  im- 
ports of  iron  showed  a  steady  increase,  both  those 
of  pig-iron  and  those  of  rolled  and  hammered 
bar ;  the  rolled  bar  coming  from  England,  and 
the  hammered  bar  from  Sweden  and  Russia. 
The  demand  for  iron  was  increasing  at  a  rapid 
rate,  and  there  was  room  for  an  increase  both  of 
the  domestic  production  and  of  imports  ;  but  the 
rise  in  imports  was  marked.  Notwithstanding 
the  heavy  duties,  the  proportion  of  imported  to 


THE   IRON   MANUFACTURE. 


59 


domestic  iron  from  1818  to  1840  remained  about 
the  same.1 

Since  importations  continued  regularly 
a  considerable  scale,  the  price  of  the  iron  made 
in  the  country  was  clearly  raised  over  the  price 
of  foreign  iron  to  the  extent  of  the  duty.  The 
country,  therefore,  paid  the  iron  tax  on  the  whole 


1  The  following  tables  show  the  imports  of  iron  and  the  home  pro- 
duction in  1818-1838 : 


Year. 

Imports. 

Tofl  Imp'ts 
Tons. 

Pig-Iron. 
Home  Product. 
Tons. 

Pig,  ctut. 
ooo  Omitt'd. 

H'md  Bar. 
Cwt. 
ooo  Omitt'd. 

RoWd  Bar. 
Cwt. 
ooo  Omitt'd. 

1818 

4 

298 

54 

17,800 

^ 

i9 

6 

325 

5* 

19,100 

\ 

20 

21 

6 
18 

389 
343 

59 
44 

22,700 
20,250 

I         50,000? 
C    Each  year. 

22 

24 

533 

101 

32,900  _^ 

_A—        -*7lJ  CT 

23 

£JQ 

592 

IC/7 

-'<$^»2fSO"~~    — 

—j  "*    ^     /  ^^^""i 

24 

16 

426 

u6 

27,900 

1 

16 
34 

493 
467 

§5 
89 

29,700 
29,500 

(         100,000? 
f     Each  year. 

27 

35 

440 

162 

31,850 

J 

28 

70 

668 

206 

47,200 

130,000 

29 

23 

590 

66 

33.950 

142,000 

3° 

22 

614 

139 

38,750 

165,000 

31 
32 

139 
203 

466 
763 

305 
4g 

45,500  ,  , 
68,700     s 

191,000 
200,000 

33 

IS7 

723 

73,500 

218,000 

34 

222 

636 

578 

71,800 

236,000 

35 

246 

631 

568 

72,250 

254,000 

36 

171 

656 

933 

8S,ooo 

272,000 

H 

283 
244 

426 
711 

956 
723 

83,250 
83,900 

290,000 
308,000 

These  figures  exaggerate  the  importance  of  the  domestic  produc- 
tion, and  must  be  subjected  to  correction  in  order  to  make  clear  the 
comparative  importance  of  the  home-made  and  the  imported  iron. 
The  quantity  of  pig-iron  produced  at  home  (estimated  before  1828) 
is  equivalent  to  a  much  less  quantity  of  bar-iron.  To  compare  the 
proportion  of  foreign  to  domestic  supply,  the  quantity  of  bar-iron  im- 
ported should  be  increased  by  about  40  per  cent  in  order  to  represent 


60  PROTECTION  TO  YOUNG  INDUSTRIES. 

quantity  used,  whether  of  foreign  or  domestic 
origin,  in  the  shape  of  prices  from  forty  to  one 
hundred  per  cent  higher  than  those  at  which  the 
iron  could  have  been  bought  abroad. 

The  fact  that  the  manufacture,  notwithstanding 
the  heavy  and  long-continued  protection  which 
it  enjoyed,  was  unable  to  supply  the  country  with 
the  iron  which  it  needed,  is  of  itself  sufficient 
evidence  that  its  protection  as  a  young  industry 
was  not  successful.  It  is  an  essential  condition 
for  the  usefulness  of  assistance  given  to  a  young 
industry,  that  the  industry  shall  ultimately  supply 
its  products  as  cheaply  as  the}'  can  be  obtained 
by  importation ;  and  this  the  iron  manufacture 
failed  to  do.  There  is,  however,  more  direct 
evidence  than  this,  that  the  manufacture  was  slow 
to  make  improvements  in  production,  which 
might  have  enabled  it  eventually  to  furnish  the 
whole  supply  needed  by  the  country,  and  in 
this  way  might  have  justified  the  heavy  taxes 
laid  for  its  benefit.  Pig-iron  continued  to  be 
made  only  with  charcoal.  The  process  of  pud- 
dling did  not  begin  to  be  introduced  before  1830, 

the  quantity  of  pig-iron  from  which  it  was  made.  (FRENCH,  p.  54.) 
Another  addition  to  the  quantity  imported  should  be  made  for  the 
imports  of  sheet  iron,  steel,  anchors,  anvils,  and  other  manufactures  of 
iron.  These  additions  would  raise  the  imports,  in  1838  for  instance, 
to  more  than  125,000  tons,  which  is  the  quantity  properly  to  be  com- 
pared to  the  308,000  tons  made  at  home. 

The  figures  of  importation  are  taken  from  GROSVENOR,  pp.  198-199 ; 
those  of  production  from  HEWITT,  A  Century  of  Mining  and  Metal- 
p.  31. 


THE  IRON  MANUFACTURE.  6l 

and  then  inefficiently  and  on  a  small  scale.1 
Not  until  the  decade  between  1830  and  1840,  at 
a  time  when  the  Compromise  Act  of  1833  was 
steadily  decreasing  duties,  was  puddling  gener- 
ally introduced.2  The  iron  rails  needed  for  the 
railroads  built  at  this  time — the  first  parts  of  the 
present  railroad  system — were  supplied  exclu- 
sively by  importation.  In  1832  an  act  of  Con- 
gress had  provided  that  duties  should  be  refunded 
on  all  imported  rails  laid  down  within  three  years 
from  the  date  of  importation.  Under  this  act  all 
the  first  railroads  imported  their  rails  without 
payment  of  duty.  Finally,  the  great  change 
which  put  the  iron  manufacture  on  a  firm  and 
durable  basis,  did  not  come  till  the  end  of  the 
decade  1830-40,  when  all  industry  was  much  de- 
pressed, and  duties  had  nearly  reached  their 
lowest  point.  That  change  consisted  in  the  use 
of  anthracite  coal  in  the  blast-furnace.  The  first 
successful  attempts  to  use  anthracite  were  made 
in  the  years  1838  and  1839 ;  the  first  successful 
furnace  was  built  in  the  latter  part  of  1838.  The 
importance  of  the  discovery  was  promptly  rec- 
ognized ;  it  was  largely  adopted  in  the  years 
immediately  following,  and  led,  among  other 
causes,  to  the  rapid  increase  of  the  production  of 

1  See  an  excellent  article,  by  an  advocate  of  protection,  in  the  Amer- 
ican Quarterly  Review,  Vol.  IX.  (1831),  pp.  376,  379,  which  gives  very 
full  information  in  regard  to  the  state  of  the  iron  manufacture  at  that 
date. 

2  FRENCH,  p.  56. 


62  PROTECTION  TO  YOUNG  INDUSTRIES. 

iron,  which  has  been  so  often  ascribed  exclusively 
to  the  protection  of  the  tariff  of  1842.  With  this 
change  the  growth  of  the  iron  manufacture  on  a 
great  scale  properly  begins.1 

It  seems  clear  that  no  connection  can  be  traced 
between  the  introduction  and  early  progress  of 
the  iron  manufacture,  and  protective  legislation. 
During  the  colonial  period,  as  we  have  seen, 
under  the  old  system  of  production  of  iron,  the 
country  had  exported  and  not  imported  iron. 
The  production  of  charcoal  iron  and  of  ham- 
mered bar  was  carried  on  before  the  adoption  of 
the  Constitution.  During  the  first  twenty  years 
after  1789,  the  iron-makers  still  held  their  own ; 
although  the  progress  of  invention  elsewhere,  and 
the  general  tendency  in  favor  of  heavy  imports, 
caused  a"  growing  importation  from  abroad.  The 
production  of  iron  by  the  old  methods  and  with 
the  use  of  charcoal  was  therefore  in  no  sense  a 
new  industry.  Its  protection  as  such  was  not 
needed  or  justified.  If  the  business  of  making 
charcoal  iron  could  not  be  carried  on  or  increased 
during  this  and  the  subsequent  period,  the  cause 
must  have  lain  in  natural  obstacles  and  disadvan- 
tages which  no  protection  could  remove.  After 
1815,  the  new  regime  in  the  production  of  iron 
had  begun  ;  the  use  of  coke  in  the  blast-furnace, 

i  FRENCH,  58-60;  GROSVENOR,  Does  Protection  Protect,  194-97. 
On  the  immediate  recognition  of  the  new  aspect  which  the  use  of  an- 
thracite gave  to  the  iron  manufacture,  see  HAZARD'S  U.  S.  Statistical 
Register,  1. 335,  368 ;  III.  173. 


THE  IRON  MANUFACTURE.  63 

and  the  production  of  wrought-iron  by  puddling 
and  rolling,  had  changed  completely  the  con- 
ditions of  production.  The  protective  legislation 
which  began  in  1818,  and  continued  in  force  for 
nearly  twenty  years,  was,  it  is  true,  intended  to 
ward  off  rather  than  to  encourage  the  adoption 
of  the  new  methods ;  but  it  is  conceivable  that, 
contrary  to  the  intentions  of  its  authors,  it  might 
have  had  the  latter  effect.  No  such  effect,  how- 
ever, is  to  be  seen.  During  the  first  ten  or  fifteen 
years  after  the  application  of  protection,  no 
changes  of  any  kind  took  place.  Late  in  the 
protective  period,  and  at  a  time  when  duties  were 
becoming  smaller,  the  puddling  process  was  in- 
troduced. The  great  change  which  marks  the 
turning-point  in  the  history  of  the  iron  manufac- 
ture in  the  United  States — the  use  of  anthracite 
— began  when  protection  ceased.  It  is  probably 
not  true,  as  is  asserted  by  advocates  of  free 
trade,1  that  protection  had  any  appreciable  in- 
fluence in  retarding  the  use  of  coal  in  making 
iron.  Other  causes,  mainly  the  refractory  nature 
of  the  fuel,  sufficiently  account  for  the  failure  to 
use  anthracite  at  an  earlier  date.  In  England 
the  first  successful  attempt  to  use  anthracite  was 
made  in  1837.2  When  the  news  of  this  reached 
the  United  States,  its  use  here  followed  very 
soon.  The  failure  to  use  coke  from  bituminous 
coal,  which  had  been  employed  in  England  for 

1  E.g.  GROSVENOR,  p.  197. 

2  SCRIVENOR,  265,  266. 


64  PROTECTION  TO  YOUNG  INDUSTRIES. 

over  half-a-century,  was  the  result  of  the  distance 
of  the  bituminous  coal-fields  from  the  centre  of 
population,  and  of  the  absence  of  the  facility  of 
transportation  which  has  since  been  given  by 
railroads.1  It  is  hardly  probable,  therefore,  that 
protection  exercised  any  considerable  harmful 
influence  in  retarding  the  progress  of  improve- 
ment. But  it  is  clear,  on  the  other  hand,  that  no 
advantages  were  obtained  from  protection  in 
stimulating  progress.  No  change  was  made 
during  the  period  of  protection  which  enabled 
the  country  to  obtain  the  metal  more  cheaply 
than  by  importation,  or  even  as  cheaply.  The 
duties  simply  taxed  the  community ;  they  did 
not  serve  to  stimulate  the  industry,  though  they 
probably  did  not  appreciably  retard  its  growth. 
We  may  therefore  conclude  without  hesitation 
that  the  duties  on  iron  during  the  generation  after 
1815  formed  a  heavy  tax  on  consumers ;  that 
they  impeded,  so  far  as  they  went,  the  industrial 
development  of  the  country ;  and  that  no  com- 
pensatory benefits  were  obtained  to  offset  these 
disadvantages. 

1  The  necessity  of  substituting,  sooner  or  later,  coal  of  some  kind 
for  charcoal  in  making  iron,  was  clearly  pointed  out  in  the  article  in  the 
American  Quarterly  Review,  referred  to  above.  The  author  did  not  be- 
lieve that  anthracite  could  be  used  in  making  pig-iron,  except  when 
mixed  with  charcoal ;  though  he  thought  it  might  be  used  in  the  pud- 
dling-furnace.  In  regard  to  bituminous  coal  heeays,  on  p.  378  :  "Our 
fields  of  bituminous  coal  are  yet  too  distant  from  dense  population,  and 
too  far  removed  from  easy  communication,  to  be  looked  to  at  present : 
but  unless  modes  be  invented  by  which  the  anthracite  coal  can  be  used 
without  mixture  in  the  blast-furnace,  these  will  become  the  ultimate  seats 
of  the  manufacturing  industry  of  the  United  States." 


CONCLUDING  REMARKS.  65 


VI. 

CONCLUDING  REMARKS. 

The  three  most  important  branches  of  industry 
to  which  protection  has  been  applied,  have  now 
been  examined.  It  has  appeared  that  the  intro- 
duction of  the  cotton  manufacture  took  place 
before  the  era  of  protection,  and  that — looking 
aside  from  the  anomalous  conditions  of  the  period 
of  restriction  from  1808  to  1815 — its  early  prog- 
ress, though  perhaps  somewhat  promoted  by 
the  minimum  duty  of  1816,  would  hardly  have 
been  much  retarded  in  the  absence  of  protective 
duties.  The  manufacture  of  woollens  received 
little  direct  assistance  before  it  reached  that  stage 
at  which  it  could  maintain  itself  without  help, 
if  it  were  for  the  advantage  of  the  country  that 
it  should  be  maintained.  In  the  iron  manu- 
facture twenty  years  of  heavy  protection  did  not 
materially  alter  the  proportion  of  home  and 
foreign  supply,  and  brought  about  no  change  in 
methods  of  production.  It  is  not  possible,  and 
hardly  necessary,  to  carry  the  inquiry  much 
farther.  Detailed  accounts  cannot  be  obtained 
of  other  industries  to  which  protection  was  ap- 
plied ;  but  so  far  as  can  be  seen,  the  same  course 
of  events  took  place  in  them  as  in  the  three 


66  PROTECTION  TO  YOUNG  INDUSTRIES. 

whose  history  we  have  followed.  The  same 
general  conditions  affected  the  manufactures  of 
glass,  of  earthenware,  of  paper,  of  cotton-bag- 
ging, sail-duck,  cordage,  and  other  articles  to 
which  protection  was  applied  during  this  time 
with  more  or  less  vigor.  We  may  assume  that 
the  same  general  effect,  or  absence  of  effect, 
followed  in  these  as  in  the  other  cases.  It  is  not 
intended  to  speak  of  the  production  of  agricul- 
tural commodities  like  sugar,  wool,  hemp,  and 
flax,  to  which  also  protection  was  applied.  In 
the  production  of  these  the  natural  advantages 
of  one  country  over  another  tell  more  decidedly 
and  surely  than  in  the  case  of  most  manufac- 
tures. This  circumstance  places  them  more  un- 
mistakably outside  the  scope  of  the  argument  we 
are  considering. 

Athough,  therefore,  the  conditions  existed  un- 
der which  it  is  most  likely  that  protection  to 
young  industries  may  be  advantageously  ap- 
plied—  a  young  and  undeveloped  country  in  a 
stage  of  transition  from  a  purely  agricultural  to 
a  more  diversified  industrial  condition ;  this  tran- 
sition, moreover,  coinciding  in  time  with  great 
changes  in  the  arts,  which  made  the  establish- 
ment of  new  industries  peculiarly  difficult  — 
notwithstanding  the  presence  of  these  conditions, 
little,  if  anything,  was  gained  by  the  costly  pro- 
tection which  the  United  States  maintained  in 
the  first  part  of  this  century.  Two  causes  ac- 


CONCLUDING  REMARKS.  67 

count  for  this.  On  the  one  hand,  the  character 
of  the  people  rendered  the  transition  of  produc- 
tive forces  to  manufactures  comparatively  easy  ; 
on  the  other,  the  sudden  shock  to  economic 
habits  during  the  restrictive  period  from  1808 
to  1815  effectually  prepared  the  way  for  such  a 
transition.  The  genius  of  the  people  for  me- 
chanical arts  showed  itself  early.  Naturally  it 
appeared  most  strikingly  in  those  fields  in  which 
the  circumstances  of  the  country  gave  the  rich- 
est opportunities ;  as  in  the  application  of  steam- 
power  to  navigation,  in  the  production  and  im- 
provement of  tools,  and  especially  of  agricul- 
tural implements,  and  in  the  cotton  manufacture. 
The  ingenuity  and  inventiveness  of  American 
mechanics  have  become  traditional ;  the  names 
of  Whitney  and  Fulton  need  only  be  mentioned 
to  show  that  these  qualities  were  not  lacking  at 
the  time  we  are  considering.  The  presence  of 
such  men  rendered  it  more  easy  to  remove  the 
obstacles  arising  from  want  of  skill  and  experi- 
ence in  manufactures.  The  political  institutions, 
the  high  average  of  intelligence,  the  habitual 
freedom  of  movement  from  place  to  place  and 
from  occupation  to  occupation,  also  made  the 
rise  of  the  existing  system  of  manufacturing 
production  at  once  more  easy  and  less  danger- 
ous than  the  same  change  in  other  countries. 
At  the  same  time  it  so  happened  that  the  embar- 
go, the  non-intercourse  acts,  and  the  war  of 


68  PROTECTION  TO  YOUNG  INDUSTRIES. 

1812,  rudely  shook  the  country  out  of  the  grooves 
in  which  it  was  running,  and  brought  about  a 
state  of  confusion  from  which  the  new  industrial 
system  could  emerge  more  easily  than  from  a 
well-settled  organization  of  industry.  The  re- 
strictive period  may  indeed  be  considered  to  have 
been  one  of  extreme  protection.  The  stimulus 
which  it  gave  to  some  manufactures  perhaps 
shows  that  the  first  steps  in  these  were  not  taken 
without  some  artificial  help.  The  intrinsic 
soundness  of  the  argument  for  protection  to 
young  industries  is  therefore  not  touched  by  the 
conclusions  drawn  from  the  history  of  its  trial  in 
the  United  States.  It  is  only  shown  that  the 
intentional  protection  of  the  tariffs  of  1816,  1824, 
and  1828,  had  little  effect.  The  period  from 
1808  till  the  financial  crisis  of  1818-19  was  a 
disturbed  and  chaotic  one,  from  which  the 
country  settled  down,  with  little  assistance  from 
protective  legislation,  into  a  new  arrangement  of 
its  productive  forces. 

The  system  of  protective  legislation  began  in 
1816,  and  was  maintained  till  toward  the  end  of 
the  decade  1830-40.  The  Compromise  Act  of 
1833  gradually  undermined  it.  By  1842  duties 
reached  a  lower  point  than  that  from  which  they 
had  started  in  1816.  During  this  whole  period 
the  argument  for  protection  to  young  industries 
had  been  essentially  the  mainstay  of  the  advo- 
cates of  protection ;  the  eventual  cheapness  of 


CONCLUDING  REMARKS.  69 

the  goods  was  the  chief  advantage  which  they 
proposed  to  obtain.  It  goes  without  saying  that 
this  was  not  the  only  argument  used,  and  that  it 
was  often  expressed  loosely  in  connection  with 
other  arguments.  One  does  not  find  precision 
of  thought  or  expression  in  the  popular  discus- 
sions of  fifty  years  ago,  more  than  in  those  of 
the  present.  The  "home  market"  argument, 
which,  though  essentially  distinct  from  that 
for  young  industries,  naturally  suggests  itself 
in  connection  with  the  latter,  was  much  urged 
during  the  period  we  are  considering.  The 
events  of  the  War  of  1812  had  vividly  im- 
pressed on  the  minds  of  the  people  the  pos- 
sible inconvenience,  in  case  of  war,  of  depend- 
ing on  foreign  trade  for  the  supply  of  articles  of 
common  use  ;  this  point  also  was  much  urged  by 
the  protectionists.  Similarly  the  want  of  reci- 
procity, and  the  possibility  of  securing,  by  retalia- 
tion, a  relaxation  of  the  restrictive  legislation  of 
foreign  countries,  were  often  mentioned.  But 
any  one  who  is  familiar  with  the  protective 
literature  of  that  day, — as  illustrated,  for  instance, 
by  the  incessant  advocacy  of  the  "  American " 
system  in  the  columns  of  Niless  Register  > — cannot 
fail  to  note  the  prominent  place  held  by  the  young 
industries  argument.  The  form  in  which  it  most 
commonly  appears  is  in  the  assertion  that  protec- 
tion normally  causes  the  prices  of  the  protected 
article  to  fall * ;  an  assertion  which  was  supposed, 

1  See,  for  instance,  the  temperate  report  of  J.  Q.  Adams,  in  1832, 


70  PROTECTION  TO  YOUNG  INDUSTRIES. 

then  as  now,  to  be  sufficiently  supported  by  the 
general  tendency  toward  a  fall  in  the  price  of  manu- 
factured articles,  consequent  on  the  great  im- 
provements in  the  methods  of  producing  such 
articles. 

Shortly  after  1832,  the  movement  in  favor  of 
protection,  which  had  had  full  sway  in  the 
Northern  States  since  1820,  began  to  lose 
strength.  The  young  industries  argument  at  the 
same  time  began  to  be  less  steadily  pressed.  About 
1840  the  protective  controversy  took  a  new  turn. 
It  seems  to  have  been  felt  by  this  time  that  manu- 
factures had  ceased  to  be  young  industries,  and 
that  the  argument  for  their  protection  as  such, 
was  no  longer  conclusive.  A  new  position  was 
taken.  The  argument  that  American  labor 
should  be  protected  from  the  competition  of  less 
highly  paid  foreign  labor,  became  the  burden  of 
the  protectionist  appeals.  The  labor  argument 
had  hardly  been  heard  in  the  period  of  which  this 
essay  treats.  Indeed,  the  difference  between  the 
rate  of  wages  in  the  United  States  and  in  Europe, 
had  furnished,  during  the  early  period,  an  argu- 
ment for  the  free-traders,  and  not  for  the  protec- 
tionists. The  free-traders  were  then  accustomed 
to  point  to  the  higher  wages  of  labor  in  the  Uni- 

in  which  this  form  of  the  argument  is  discussed  as  the  chief  con- 
tention of  the  protectionists.  Adams,  though  himself  a  protec- 
tionist, refutes  it,  and  bases  his  faith  in  protection  chiefly  on  the 
ground  of  the  loss  and  inconvenience  suffered  through  the  interrup- 
tion of  foreign  trade  in  time  of  war.  The  report  is  in  Reports  of 
Committees,  22d  Congress,  1st  Session,  Vol.  V.,  No.  481. 


CONCLUDING  REMARKS.  7 1 

ted  States  as  an  insuperable  obstacle  to  the  suc- 
cessful establishment  of  manufactures.  They 
used  the  wages  argument  as  a  foil  to  the  young 
industries  argument ;  they  asserted  that  as  long 
as  wages  were  so  much  lower  in  Europe,  manu- 
facturers would  never  be  able  to  maintain  them- 
selves without  aid  from  the  government.  The 
protectionists,  on  the  other  hand,  were  at  that 
time  under  the  necessity  of  explaining  away  the 
difference  of  wages;  they  endeavored  to  show 
that  this  difference  was  not  so  great  as  was  com- 
monly supposed,  and  that,  so  far  as  it  existed,  it 
afforded  no  good  reason  against  adopting  protec- 
tion.1 About  1840,  the  positions  of  the  contend- 
ing parties  began  to  change.3  The  protectionists 
began  to  take  the  offensive  on  the  labor  question  ; 
the  free-traders  were  forced  to  the  defensive  on 
this  point.  The  protectionists  asserted  that  high 
duties  were  necessary  to  shut  out  the  competition 
of  the  ill-paid  laborers  of  Europe,  and  to  maintain 
the  high  wages  of  the  laborers  of  the  United 
States.  The  free-traders  now  had  to  explain  and 
defend  on  the  wages  question.  The  pauper-labor 

1  See,  among  others,  Clay's  Tariff  Speech  of  1824,  Works,  I.  465, 
466. 

3  Some  signs  of  the  appeal  for  the  benefit  of  "  labor,"  may  be 
found  in  Webster's  Speech  at  Saratoga  (August,  1840),  Works,  II. 
24-28.  Cp.  the  acute  remarks  of  Calhoun  in  the  sameyear,  Works, 
III.  434.  The  circumstance  that  the  manufacture  of  iron,  which 
had  hitherto  played  no  very  great  part  in  the  protective  controversy, 
became,  after  1840,  by  far  the  most  prominent  element  for  protec- 
tion, accounts  in  large  part  for  the  new  aspect  of  the  labor  argument. 


?2  PROTECTION  TO  YOUNG  INDUSTRIES. 

argument  of  the  protectionists  appeared  full- 
fledged  in  the  tariff  debates  of  1842  ;  and  since 
that  time  it  has  remained  the  chief  consideration 
impressed  on  the  popular  mind  in  connection  with 
the  tariff.  The  use  of  this  argument,  as  well  as 
the  rise  of  the  economic  school  of  the  late  Mr. 
Henry  C.  Carey,  shows  that  the  argument  for 
young  industries,  which  has  been  considered  in 
these  pages,  was  no  longer  felt  to  be  sufficiently 
strong  to  support  the  demand  for  continued  pro.- 
tection.  It  has  already  been  said  that  the  argu- 
ment does  not  fairly  apply  to  the  present  condi- 
tion of  the  United  States.  This,  moreover, 
seems  to  be  very  generally  perceived.  Doubtless, 
the  plea  for  young  industries  is  still  heard  ;  it  is 
part  of  the  accepted  stock  of  the  protectionist 
ammunition,  and  may  be  found  in  the  speeches 
and  pamphlets  of  the  day.  But  a  serious  answer 
to  it  is  hardly  felt  to  be  necessary ;  at  the  present 
time  ridicule  is  the  common  answer,  and  for  pop- 
ular discussion  a  sufficient  one.  The  labor 
argument,  and  the  generalities  of  Mr.  Carey's 
system,  are  now  the  chief  supports  of  the  protec- 
tive theory.  The  time  has  long  gone  by  when  the 
young  industries  argument  could  be  the  mainstay 
of  the  protective  system  in  the  United  States. 


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